NEW DELHI, Sept 10: Reserve Bank today said the liquidity situation currently is comfortable and indicated that monetary policy action in the forthcoming mid-quarterly review next week would depend on latest developments in the money market.
“For the last several weeks…, liquidity levels have been within our comfort zone… (but) we monitor this on a daily basis”, Reserve Bank Deputy Governor Subir Gokarn told reporters on the sidelines of a function here.
RBI, he added, would take note of emergence of “signs of stress, particularly if they are likely to be persistent. We will take that into account…We have for quite some time realised there was stress in the market both in terms of quantity of LAF (Liquidity Adjustment Facility) borrowings and in terms of the behaviour of the call rate which is the number we look at. There are no signs of stress at the moment”.
The central bank, in its mid-quarterly review of monetary policy to be announced on September 17, is expected to take steps to promote growth and also contain inflationary expectations. The RBI is also expected to respond to some bankers’ demand for abolition of Cash Reserve Ratio (CRR), the amount of money which banks are required to keep with the central bank in cash.
Answering questions on inflation and its impact on the forthcoming policy review, Gokarn said: “I don’t have expectations. I don’t cite expectations. We will look at the data when it comes”.
The government is likely to come up with the August inflation data on September 14. The wholesale price based-inflation in July slipped to 6.87 per cent from 7.25 per cent in the previous month.
The Reserve Bank has been taking Open Market Operations (OMO) to pump in liquidity into the market by buying government bonds. The OMO, which is easy to implement, only has short term implications on the liquidity situation.
The CRR cut is more significant as it has lasting impact on the liquidity situation, sources said, adding the central bank would have to take into account various other factors, including the need for liquidity, before announcing any changes.
As of now, sources said, the central bank was keeping the options open and would act depending upon the need of the hour.
On currency fluctuation, Gokarn said: “Over the last several weeks, the currency has been relatively stable (as) there is a rough balance between inflows and outflows. We are obviously monitoring the situation and will react to it as appropriate.”
The central bank had intervened in the foreign currency markets and taken administrative steps to check volatility in rupee-dollar exchange rate.
As regards India’s foreign currency reserves, Gokarn said, “it’s something that we have to measure against the potential short-term liability. That’s something we have been benchmarking consistently and we have never been uncomfortable with the level of reserves which we had”.
Intervention in forex market, Gokarn said, “has been one component of our approach to the exchange rate. Others have been in terms of some administrative actions which we took in November, December and later and in fact have rolled back some of those because we felt they were adding some stress or difficulty to the market and to the liquidity”.
The third component, he added, “was to expand the channel available to foreign investors”.
On the impact of the European Central Bank’s (ECB) decision to buy unlimited sovereign bonds to save Euro, Gokarn said it would bring “some comfort to the investors across the board. We saw some of that in the immediate aftermath of the announcement and I suspect that is the way it will play out”.
Besides ensuring liquidity in the markets, he said, the ECB decision would provide assurance that the European bond markets would remain very stable.
In order to deal with the financial problems of the eurozone countries, the ECB last week had announced a programme that would allow it to execute potentially unlimited sovereign bond-buying. (PTI)
Car sales drop 19%, biggest in 10
months; SIAM seeks govt help
NEW DELHI, Sept 10: Car sales in India declined by 18.56 per cent in August this year, the biggest drop in 10 months, prompting industry body SIAM to seek cut in excise duty from the government.
With exports also posting the highest decline in more than 11 years, falling 26.83 per cent during the month, Society of Indian Automobile Manufacturers (SIAM) also sought a stimulus package similar to the one given during the 2008-09 downturn, stating the industry is “now entering a desperate situation”.
The overall vehicle sales in the country also registered a drop of 3.9 per cent to 13,54,436 units in August this year, the biggest decline in more than three and half years.
According to the latest SIAM figures, domestic cars sales in August stood at 1,18,142 units compared to 1,45,066 units in the same month last year, down 18.56 per cent. The rate of decline is the highest since October 2011, when sales declined by 23.74 per cent to 1,39,095 units.
“This is the time when wholesale numbers should be picking up as dealers stock-up to meet festive season demand, but this has not happened. We are entering a desperate situation. We need help from the government,” SIAM Senior Director Sugato Sen told reporters here.
He said the excise duty on automobiles, which was increased in this year’s Budget, needs to be reduced, particularly for the commercial vehicles segment.
“The stimulus package, which was provided during the 2008-09 downturn, needs to be provided. If something is not done by the government, we are going to suffer,” Sen added.
Car exports during the month stood at 36,104 units, down 26.83 per cent. The previous lowest decline in exports was recorded in March 2001, when overseas shipments dropped by 48.37 per cent to just 2,221 units.
“The decline in exports has also affected the overall production of the companies here in India,” he said.
In this year’s Budget, excise duty on small cars was hiked to 12 per cent from 10 per cent. For petrol cars with engines under 1,200 cc and diesel cars with engine capacity under 1,500 cc, but the length exceeding four metres were increased to 24 per cent from 22 per cent and a fixed duty of Rs 15,000.
Petrol and diesel driven vehicles having length exceeding four metres and engine capacity of over 1,200 cc and 1,500 cc respectively were charged with an ad valorem duty of 27 per cent, instead of the earlier 22 per cent and a fixed duty of Rs 15,000.
During the 2008-09 downturn, the government had provided a stimulus package by reducing CENVAT by 4 per cent. For the commercial vehicles segment, public sector banks were allowed to provide line of credit to NBFCs on new purchases and one-time assistance under Jawaharlal Nehru National Urban Renewal Mission to purchase busses for urban transportation.
The month-long lockout at Maruti Suzuki’s Manesar plant from July 21 impacted the industry’s numbers last month.
Sen, however, said this was not the sole reason for the decline in car sales as the overall market is down due to high interest rates and fuel prices along with inflationary pressure.
“The drop of nearly 19 per cent for the industry is too big for a single company to make up,” he said.
In the passenger car segment, market leader Maruti Suzuki’s sales fell by 49.99 per cent to 31,653 units. Rival Hyundai Motor India’s sales, however, increased by 6.58 per cent to 28,192 units. Homegrown auto major Tata Motors’ car sales were up by 31.23 per cent at 17,727 units.
According to the SIAM figures, motorcycle sales in last month fell by 8.46 per cent to 7,66,127 units from 8,36,887 units in the same month previous year. This is the highest decline in more than three and half years. The sales had fallen by 5.81 per cent in January 2009.
Total two-wheeler sales in August 2012 decreased by 4.50 per cent to 10,57,925 units from 11,07,782 units in the same period of previous year.
“The two-wheeler industry is also suffering. The last decline happened in January 2009 when sales dropped by 3.95 per cent,” Sen said, adding factors like high petrol price and interest rates were keeping customers away.
In the motorcycle segment, market leader Hero MotoCorp posted 15.34 per cent fall in sales to 3,88,903 units in August. Rival Bajaj Auto’s sales went down by 13.89 per cent to 1,95,093 units.
However, Honda Motorcycle & Scooter India (HMSI) posted a 77.83 per cent increase in sales to 96,876 units, while TVS Motor moved 39,413 units, 29.85 per cent less than the same month of the previous year.
The scooter segment’s overall sales grew by 9.95 per cent to 2,33,180 units from 2,12,077 units.
HMSI’s scooter sales grew by 14.74 per cent to 1,12,288 units in August, while Hero MotoCorp sold 42,836 units, up 51.63 per cent. TVS Motor’s sales saw decline of 23.08 per cent to 37,462 units.
Total sales of commercial vehicles in August rose by 3.92 per cent to 66,767 units from 64,248 units in the year-ago period, SIAM said.
Medium and Heavy Commercial Vehicle sales declined 8.91 per cent to 25,003 units during the month against 27,448 units in August last year.
According to SIAM, light commercial vehicle sales grew 13.49 per cent to 41,764 units in August 2012 from 36,800 units in August 2011.
In the three-wheeler category, sales went down marginally to 45,386 units from 45,468 units in the same month last year. (PTI)
HSCI changes name to Honda Cars India
NEW DELHI, Sept 10: Japanese auto major Honda has changed the name of its Indian operations to Honda Cars India Ltd following the break up of its joint venture with Usha International of the Shriram Group.
The erstwhile JV, Honda Siel Cars India (HSCI), will now become a 100 per cent subsidiary of Honda in India.
“The name change will be with immediate effect as per the fresh Certificate of Incorporation issued by the Registrar of Companies, NCT of Delhi and Haryana,” Honda Cars India Ltd (HCIL) said in a statement.
Last month, Honda bought out Usha International’s entire 3.16 per cent stake for Rs 180 crore in the joint venture, which was established in December 1995.
HCIL President & CEO Hironori Kanayama said the company was committed to the Indian market and would continue to bring latest products from Honda. (PTI)
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