Need for a neutral reserve to replace dollar, says Prime Minister

Prime Minister Manmohan Singh has echoed China’s proposal for a new global currency to replace the dollar, pointing out that moving to a neutral reserve asset has been discussed since the 1970s. However,he said it is too early to discuss the issue at the one-day G-20 summit in London on Thursday,as it needs“a lot of preparation”.

The power to issue money is an indication of the power of a country and no one gives up power voluntarily. So, these are complicated issues, depending on the power balance,” Singh told a British daily. “There are virtuous technical solutions, but these are not issues that can be resolved through technical analysis,”he said.

The subject of an alternative to the US dollar has cropped up as Washington has issued massive amounts of currency to finance bailouts for its domestic financial system. The excess flow has reduced the dollar’s exchange rate against the euro and Japanese yen. Lower dollar rates mean forex reserves of countries like China and India are worthless.Data put out by RBI on Tuesday said India lost $33 billion due to such valuation losses from April to December 2008.

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President Rule in Meghalaya

History repeated itself in Meghalaya today as the Centre imposed President’s Rule, 18 years after a similar situation in the state.

The Centre had imposed President’s Rule on October 11, 1991, after the then Speaker, PR Kyndiah, suspended five MLAs, mostly independents, on grounds of defection.

A meeting of the Union Cabinet, which was presided over by Prime Minister Manmohan Singh on Wednesday morning, took a decision to bring the state under central rule and to keep the assembly under suspended animation.

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Big-ticket bids to hot up Coal-To-Liquid project

Country’s top corporate houses including the Tatas, Mukesh Ambani-controlled Reliance Group, the Jindals along with the Adani Group and others will now have to compete and out bid each other to secure rights for a cluster of coal blocks—with estimated reserves of about 1.5 billion tonne—for their proposed $8 billion coal-to-liquid (CTL) project in India.

With the soaring cost of crude oil, currently close to $130 a barrel, there has been a huge rush of proposals from big corporate houses for coal block for setting up a coal-to-liquid project. Prime Minister Manmohan Singh, as the minister in-charge of coal, has approved setting up of one coal-to-liquid (CTL) project in the country. Singh has directed the ministry of coal to invite fresh expression of interests (EOIs) for allotment of identified coal blocks for setting up a CTL project.

As per the ministry of coal estimates, coal reserves of about 1 to 1.5 billion tonne are required to produce 3.5 million tonne oil & oil products. The block/cluster of these coal blocks should enable mining operations of 28-31 million tonne run-of-mine coal per annum for 30 years. The estimated investment for setting up such a project is in the range of $6 billion to $8 billion.

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Government Gulps the Oil Flame

The biggest oil bail out package announced by the government on Wednesday will force consumers to pay Rs 5 more for each litre of petrol, Rs 3 for diesel and Rs 50 for an LPG gas cylinder. Public sector oil companies will bear an additional burden of Rs 23,000 crore on their balance sheets despite the government taking a revenue hit of Rs 22, 660 crore and issuing Rs 94,601 crore thought oil bonds.

The new prices take effect from Wednesday midnight. Petrol and diesel prices were raised in February when the Indian basket of crude oil was at $67 per barrel. Today, it is ruling close to $123 a barrel, after touching a high of $129 a barrel last month.

Addressing the nation Prime Minister Manmohan Singh said, “Taken together, this entire effort will only bridge at tenth of the uncovered gap of over Rs 200,000 crore. There is still a gap of almost 90% which has to be bridged.”

Petroleum minister Murli Deora, However, described the price impact on aam admi as marginal. “We were left with no choice. Indian Oil, Bharat Petroleum and Hindustan Petroleum would have suffered a revenue loss of Rs 2, 45,305 crore this fiscal without these measures.

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Oil firms push f or price hike

A hike of Rs 2 a litre each on petrol and diesel at the pumps appears imminent. Petroleum minister Murli Deora said he would be meeting Prime Minister Manmohan Singh on Friday to discuss raising retail prices, among other measures, to bail out oil marketing companies (OMCs), reeling under a severe liquidity crunch on account of the high crude oil prices.

With global crude touching $137 a barrel, the Indian oil basket has crossed the $125-a barrel price and the government is under enormous pressure from state owned OMCs to increase consumer prices of petrol and diesel.

Against a price hike of Rs 5 a litre each in the price of petrol and diesel proposed by the OMCs-Indian Oil, HPCL and BPCL-to tide over the current crisis following the unprecedented increase in the price of global crude, sources said the government may accede only to a hike of Rs 2-3 a litre.

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