Waning demand for LIC IPO highlights fiscal challenges for PM Modi

 Life Insurance Corporation of India’s board on Saturday approved selling a 3.5% stake for about Rs 210 billion ($2.8 billion), far lower than the Rs 500 billion estimated before Russia invaded Ukraine

India’s decision to go ahead with a much-reduced target for its vaunted life insurer’s initial public offering, as skittish investors continue to pull money from the South Asian nation, is adding to the risks threatening the nation’s fiscal deficit target.

Life Insurance Corporation of India’s board on Saturday approved selling a 3.5% stake for about 210 billion rupees ($2.8 billion), far lower than the 500 billion rupees estimated before Russia invaded Ukraine. Anchor investors had been reluctant to commit as the war eroded demand for equities, according to people with knowledge of the matter, with foreign funds withdrawing more than $16 billion from Indian stocks this year.

Prime Minister Narendra Modi needs inflows because crude oil prices — one of India’s largest imports — have surged. Costs have risen so much that it’s becoming unsustainable for the administration to keep charging taxes on fuel that have been key to bridging a budget deficit. Leaving pump prices high risks stoking inflation and potential social unrest that is already roiling neighboring nations as the region emerges from the pandemic….LIC ipo Date

Rupee slumps to 71-mark first time ever, drops 26 paise against US dollar

Forex dealers said besides robust month-end demand for the American currency from oil importers, dollar's strength against its rival currencies on expectations of rising interest rates amid lingering

The rupee slumped to a fresh record low of 71 against the dollar for the first time ever by falling 26 paise on persistent demand for the US currency amid rising crude prices.

At the Interbank Foreign Exchange (Forex) market, the local currency opened lower at 70.95 a dollar and slipped further to hit its lifetime low of 71 from its previous close of 70.74.

Forex dealers said besides robust month-end demand for the American currency from oil importers, dollar's strength against its rival currencies on expectations of rising interest rates amid lingering Sino-US trade tensions, weighed on the domestic currency.

On Thursday, the rupee slid further by 15 paise to close at a fresh lifetime low of 70.74 to the dollar due to strong demand for the greenback from oil importers and surging crude oil prices stoking inflation fears.

Growing fears about rising inflation in amid high global crude oil prices and consistent outflow of foreign funds from the domestic equity market also weighed on the domestic currency.

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Prices of subsidised LPG zoom 16 per cent since Modi took charge

Global crude oil prices have slumped by 49 per cent during the same period

The prices of subsidised cooking gas zoomed by 16 per cent, from Rs 414 per cylinder when the Bharatiya Janata Party (BJP) government came to power in May 2014 to Rs 479.77 in August 2017, despite global crude oil prices dipping by about 49 per cent.

The Narendra Modi-led government had stormed to power in 2014 on the back of serious corruption charges against the Congress-led regime and the rise in prices of commodities like cooking gas, against which the BJP had raised its voice. Interestingly, the price of liquefied petroleum gas (LPG) was revised 22 times by oil marketing companies (OMCs) like Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL) since May 2014, when the BJP government took charge.

However, on the back of a 49 per cent drop in international crude prices, from $102.71 a barrel on May 30, 2014, to $52.16 (Brent crude) on August 3, 2017, prices of non-subsidised cylinders dipped 44 per cent, from Rs 928.50 per cylinder in May 2014 to Rs 524 in August 2017.

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Also, in an effort to reduce the subsidy burden or to completely do away with the subsidy, OMCs are authorised to increase prices of subsidised domestic LPG cylinders by Rs 4 per month till March 2018. "The government stands committed and will continue to provide subsidy assistance to the needy and poor households," said an official close to the development.

The subsidy amount on a 14.2-kg cylinder transferred to the accounts of Delhi consumers stands at Rs 86.54 currently, which the government wants to do away with or reduce to the range of Rs 40 per cylinder by March 2018. The current national average of LPG subsidy per cylinder comes to the tune of about Rs 58 per cylinder.

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