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Today's Hot Stories - January 24, 2013

10 Headlines for Today

(1) Andhra HC rejects Jaganmohan's bail plea
(2) Rajnath slams UPA for playing communal politics
(3) Hillary defends handling of Libya attack
(4) Salary scales tip in favour of IIMs, not CAs
(5) RBI panel for 30-year fixed rate loans
(6) Global CEOs for greater market access
(7) Raina, Rohit lead India to series triumph
(8) Li Na thumps Sharapova to reach final
(9) Swansea stifle Chelsea to reach final
(10) Nirbhaya scores 73% in last exam of her life

5 Stories for Today

(1) Shinde's statement on 'Hindu terrorism' based on facts, Salman Khurshid says
(2) North Korea says plans nuclear test aimed at US
(3) ING exits life insurance in India
(4) Developing nations on top for first time in 2012 FDI index: UN
(5) Unstable govt in 2014 biggest threat to reforms: FM

(1) Shinde's statement on 'Hindu terrorism' based on facts, Salman Khurshid says

External affairs minister Salman Khurshid today backed home minister Sushilkumar Shinde's statement on "Hindu terrorism" saying it was based "entirely on facts" made available by investigative agencies. He, however, said that terror has no religion and colour.

"Let me just say this to you very clearly that our stated position, that is shared fully by the home minister and past home minister, is based entirely on facts as the investigative agencies have made available to the government," Khurshid told reporters here.

Unfazed by BJP's demand for sacking Shinde for his statement, Khurshid said "The attempt to divert attention and to push it in a particular pre-meditated direction by some people was obviously repudiated by the information that was available with the Home Ministry and that is the context in which all these statements are made".

Shinde had earlier this week stoked a controversy by accusing BJP and RSS of conducting terror training camps and promoting "Hindu terrorism".

Defending Shinde, Khurshid said one should not be looking at finer notions of what should be and can be said at any given time.

"I think core understanding is that there are elements who want to use some cover of pretence and some cover of allegation against other groups to continue on their nefarious and unwholesome activities," he said when asked about Mumbai attacks mastermind Hafiz Saeed and LeT trying to exploit Shinde's statement.

Khurshid underlined that any form of violence that is propagated by extremists of any kind, irrespective of religion is what is dangerous for India.

"Terror does not have religion. We have said this very clearly. And religion should not be associated with colour. This we have said very clearly. It is terror that we have to fight. Terror directed against India that we are fighting".

He said those are the facts available to the home ministry on which the government have been consistently making the statement.

"I think we should not be distracted by a phrase here or there frankly. The intention, the commitment, the determination is what clearly matters," he said.

(2) North Korea says plans nuclear test aimed at US

North Korea said Thursday it planned to carry out a nuclear test and more rocket launches aimed at its "arch-enemy" the United States in response to tightened UN sanctions, but offered no timeframe.

"We do not hide that the various satellites and long-range rockets we will continue to launch, as well as the high-level nuclear test we will proceed with, are aimed at our arch-enemy the United States," the National Defence Commission said.

The mention of the test, which would mark the North's third detonation of a nuclear device, came towards the end of a commission statement carried by the official Korean Central News Agency.

The statement was entitled: "Enter all-out confrontation to safeguard the sovereignty of the nation and people."

It gave no indication of when the test might be carried out, or explain the meaning of "high-level". The North's two previous nuclear tests were held in 2006 and 2009.

Much of the statement was devoted to condemning Tuesday's announcement by the UN Security Council of expanded sanctions against Pyongyang in response to its long-range rocket launch last month.

"We absolutely refute all the illegal and outlawed resolutions adopted by the Security Council," the commission said.

Tuesday's resolution, proposed by the United States, was adopted unanimously by the 15-nation council, including the North's sole major ally China.

North Korea's foreign ministry had denounced the move on Wednesday, when it also gave the first hint that Pyongyang would react with a nuclear test, saying the country would take "physical actions" to boost its nuclear deterrent.

South Korea's Yonhap news agency, citing a South Korean intelligence source, reported that Pyongyang had finished technical preparations and could conduct an atomic test within days of a decision by leader Kim Jong-Un.

Last month, a US think-tank reached a similar conclusion based on satellite photos, suggesting the North had repaired rain damage at its nuclear test site and could conduct a detonation at two weeks' notice.

China, which had sought to shield North Korea from harsher sanctions sought by the United States and its allies, appealed on Wednesday for restraint and diplomatic efforts to avoid a dangerous escalation of tensions.

"The DPRK's (North Korea's) satellite launch as well as speculation of a nuclear test highlight the urgency and importance of settling relevant issues on the Korean peninsula," foreign ministry spokesman Hong Lei told reporters.

"We hope all parties will bear in mind peace and stability of the Korean peninsula, exercise calmness and restraint and avoid actions that might escalate tension."

(3) ING exits life insurance in India

Dutch financial services group ING has exited its insurance business in India selling its 26% stake in ING Vysya Life Insurance to its joint venture partner Exide Industries in a deal that valued the company at Rs 1,100 crore. Exide is now looking for a foreign insurer who will buy the 26% stake.

Although a minority shareholder, holding the maximum permissible 26% stake, ING group controlled the life insurance operations for over a decade even as Indian shareholding changed several hands. A statement issued from Amsterdam said that ING's exit from the Indian life insurance joint venture is part of the previously announced intended divestment of ING's Asian Insurance and Investment Management businesses. "The process for the remaining businesses is ongoing. Any further announcements will be made if and when appropriate. Subject to regulatory approvals, the transaction is expected to close in the first half of 2013," said the statement.

The valuation of the deal has surprised industry insiders. "Prima facie a valuation of Rs 1,100 crore seems to be less considering that this is a 10-year old company where the promoters have invested more than Rs 1,000 crore," said an industry official.

Industry officials also feel that the coordinated exit of financial investors gives an impression that these were structured investments where returns are not entirely market linked. However, industry persons also point out that in an exit deal the Indian partner is on a strong footing as partners have the right of first refusal.

In a statement to the stock exchanges, Exide Industries said: "The company, currently owner of 50% of the equity capital of ING Vysya Life Insurance (IVL), has in-principle decided to acquire the remaining 50% of the equity capital of IVL (26% from ING group, 16.32% from the Hemendra Kothari group and 7.68% from the Enam group) for an aggregate consideration of Rs. 550 crore approximately, subject to regulatory approvals."

Hemendra Kothari and Enam had picked up stakes in the company as financial investors in recent years.

ING is the third insurer to exit India after the opening up of the sector. Australian insurer AMP in a joint venture with Sanmar was the first to sell out to Reliance Life Insurance. Some years later American insurer Chubb exited its joint venture with HDFC following disagreement with its partner who later tied up with Ergo. Last year US insurer New York Life sold its stake in Max New York Life to Max which later sold its stake to Japan's Mitsui. Following the global financial crisis, several insurers have tempered their expansion plans. At present, North American insurer Manulife and Samsung Life of Canada are actively pursuing a presence in India.

ING, which has a presence in banking, will continue to retain its presence. "Today's agreement does not impact ING Vysya Bank, a publicly-listed Indian bank in which ING has a 44% stake, nor ING's fund management business in the country," the statement added.

Automotive battery manufacturer Exide is a Rajan Raheja group company and has a market capitalisation of over Rs 10,000 crore. The company got into the life insurance business by buying out GMR group. GMR group, which along with Vysya Bank, was the original partner of ING had acquired a majority stake after ING acquired controlling stake in Vysya Bank.

Vysya Bank had gradually diluted stake in favour of GMR to avoid falling foul of regulation which did not permit foreign partners holding 26% to invest in their joint venture partners.

Of the 24 life insurance players in the country, two companies— Life Insurance Corporation (LIC) and Sahara India Life Insurance Co—are running the business without foreign partners.

(4) Developing nations on top for first time in 2012 FDI index: UN

Developing countries overtook their traditionally wealthier counterparts in attracting foreign direct investment for the first time last year, as industrialised nations bore the brunt of an 18 per cent plunge in FDI flows, the UN's trade and investment think tank UNCTAD said on Wednesday.

Last year, global foreign direct investments -- when a company in one country invests for instance in production facilities or buys a business in another country -- came in at USD 1.3 trillion, down from USD 1.6 trillion in 2011, UNCTAD's Global Investment Trend Monitor showed.

In a dramatic shift on the global investment scale, developing countries reaped USD 680 billion of that, or 52 per cent of the total.

"For the first time in history, developing countries have attracted more investment than developed countries," James Zhan, who head's UNCTAD's investment and enterprise division, told reporters in Geneva.

The shift was largely prompted by evaporating investments in crisis-hit developed economies like the United States, European nations and Japan, which accounted for 90 per cent of the USD 300 billion-decline in global FDI last year, Zahn said.

"We thought we were on the way to a steady recovery, ... (but) the recovery has derailed," added Zahn, who pointed out that global investment figures had turned upwards in 2010 and 2011. But amid growing market uncertainty, they fell last year to near the historic low of USD 1.2 trillion which came during the worst of the global financial crisis in 2009.

The US, which remains the world's largest recipient of foreign direct investment, saw its FDI inflows slip more than 35 per cent to USD 147 billion, while Germany saw its net investment level plunge from USD 40 billion in 2011 to just USD 1.3 billion last year, mainly due to large divestments there.

"Developing countries also suffered from the global decline," Zhan said, "but the decline was much more moderate."

Asia, which raked in 59 per cent of all FDI to developing countries, saw its inflow dip 9.5 per cent, with China, the world's second-largest recipient of such investments, registering a 3.4-per cent drop in 2012 to USD 120 billion.

South America and Africa meanwhile registered positive growth in FDI flows last year.

Last year's overall drop in investments came despite the fact that the global economy grew 2.3 per cent in 2012, while worldwide trade was up 3.2 per cent.

Going forward, UNCTAD expects FDI flows to rise to just USD 1.4 trillion this year and to USD 1.6 trillion in 2014 -- still far below the 2007 pre-crisis level of some USD 2.0 trillion in investments.

(5) Unstable govt in 2014 biggest threat to reforms: FM

The biggest threat to economic reforms is an unstable government in 2014, finance minister P Chidambaram told investors in Singapore on Wednesday as he vowed to push ahead with the reform agenda and fiscal consolidation. The finance minister is on whistle-stop tour of Hong Kong and Singapore as part of his move to meet foreign investors and convince them about the reforms being undertaken in India and the strength of the India growth story.

"This is in line with our view that politics will be focus for markets from late 2013," a report from Bank of America Merrill Lynch, which hosted the finance minister's meeting with investors, said. Chidambaram hoped to get the insurance and the pension bill approved in the Budget Session of Parliament. "He mentioned that behind the noise, there were quiet negotiations with the opposition parties for support from them," the report said. The finance minister expects the economy to grow by 5.7% in the current fiscal year and around 6% to 7% in FY14. "By FY15, he is hoping to go back to the 8% GDP growth rate of the past," the report said.

The FM said GST is unlikely to be implemented by April 13 although he hopes to introduce the bill in the Monsoon Session and get it approved in the Winter Session (December 2013). "This assumes a consensus with the states post the reports by the two committees (one on the design of GST and the other on compensation)."

Chidambaram was confident of keeping the fiscal deficit in the current financial year within the revised target of 5.3% of GDP. "This would be done mostly through reducing expenditure and austerity measures. Over the longer term fiscal deficit would be cut by 0.6% every year to bring it to 3% of GDP by FY17 through cost cuts as well as enhanced revenue (but without tax increases)," the report said.

The FM said he expects government revenues to rise by 20% every year though not by raising taxes but having a stable tax regime, non-adversarial tax compliance and a fair dispute settlement mechanism. Chidambaram's promise of not to raise taxes have come as a relief for jittery investors and companies, who were expecting imposition of a higher tax burden in the 2013-14 Budget against the backdrop of a tight fiscal situation.

The FM reiterated that the cabinet committee on investments would speed up project approvals. "Moreover public sector undertakings have been asked to spend on projects as per targets or return the surplus cash by way of special dividends," the report said.

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