Strong industry data adds to stimulus debate

NEW DELHI (Reuters) - India's industrial output grew a faster-than-expected 9.1 percent in September from a year earlier, helped by stimulus measures and adding to the debate over when the government should pull back from its aggressive policies to drive growth.

The increase in industrial output topped expectations in a Reuters poll, and August's annual growth was revised up to 11 percent from 10.4 percent, data showed on Thursday.

"It's extremely strong. Month-on-month it has grown about 17 percent annualised after seasonal adjustments. If this pick-up is not because of consumption then it won't sustain," said Ramya Suryanarayanan, economist at DBS in Singapore.

"The rise is mainly on account of pent-up demand," she said, expecting the rate of industrial output growth would moderate in October and November.

Yields on the 10-year bond rose 2 basis points following the data release.

Consumer durable goods output surged by an annual 22.2 percent as stimulus measures, festivals and wage back-pay to government staff boosted demand.

Manufacturing production in Asia's third-largest economy rose 9.3 percent in September from a year earlier, while mining output was up 8.6 percent and power generation rose 7.9 percent.

"It is much above expectations, even if you adjust for the positives ahead of Diwali in October. It is reiterating the fact that the policy environment continues to support industrial growth," Jyotinder Kaur, economist at HDFC Bank in new Delhi.

"I think the RBI will hike the repo and reverse repo rates at the January policy, but banks are not likely to immediately follow by raising lending rates. That will maintain sweet spot for industrial growth," Kaur said.

India's industrial output growth, which expanded for the ninth consecutive month, still lagged neighbouring China's 13.9 percent growth in September.

On Wednesday, China reported October factory output growth surged to a 19-month high of 16.1 percent, a sign the world's third-largest economy had put the worst of the global downturn behind it.

The October purchasing managers' index for India showed the pace of manufacturing activity picked up as domestic demand and factory orders rose.

BAD MONSOON

Faster output at factories, mines and utilities has helped offset a decline in farm output after the weakest monsoon in nearly four decades and then floods in parts of the country hurt crops and pushed up food prices.

Price pressures in recent months have strengthened the view the central bank could start tightening from early next year.

Economists think the first policy shift could be an increase in the cash reserve ratio for banks in the December quarter.

On Sunday, Prime Minister Manmohan Singh said the economy could still grow by 6.5 percent in 2009/10 (April-March), compared with 6.7 percent last year and 9 percent or more in each of the previous three years.

Officials have said the country still had to wait before unwinding stimulus efforts as the economy was not operating at full capacity, and said the inflationary impact of India's stimulus measures was likely to be minimal.

Last month, Reserve Bank of India kept its key lending rate unchanged after cutting it by 425 basis points between October and April as the global downturn hit the economy harder than expected. It also slashed banks' reserve requirements and pumped liquidity into markets.

Indirect tax collections drop 13% to Rs 25,495 cr in Oct

NEW DELHI: Excise and service tax collections continued to decline despite signs of a pick up in manufacturing and a general revival in the economic
activity, bringing into question the strength of the economic recovery underway and weakening the case for any immediate withdrawal of the fiscal stimulus. The contraction in customs duty was, however, not surprising with imports still falling at over 30% rates in recent months.

Total indirect tax collections, including excise duty, customs and service tax, dropped 12.95% to Rs 25,495 crore in October 2009 over corresponding month last year. However, October collections look better when stacked against September 2009 mop-up, suggesting some improvement.

The month-on-month contraction in excise collection is particularly surprising given the strong evidence of pick-up in manufacturing, which had grown a strong 10.4% in August 2009, the latest month for which data is available. The manufacturing looks to be still doing well. October had witnessed strong cement despatches and automobile sales have touched highest ever in any month.

“It may be too early to draw any conclusion on the trend,” a finance ministry official said. The government had indeed cut factory levies to shield the country from the global financial crisis. That could be one explanation for the week excise collections. The financial services sector, one of the largest contributor to the service tax, has also shown some recovery. Another official in the ministry, however, said a detailed analysis was yet to be carried out.

But the overall contraction in service tax collections does not square with the official 6.5% estimate of national income or GDP growth in the economy. Services have an over 55% share in the GDP, measured at current price.

The government’s total indirect tax collections for April-October 2009 are only 47% of the total budgeted collection from customs, excise and service tax levy for 2009-10. The lower than budgeted collection will put further pressure on government finances.

“We can’t continue to have fiscal deficit in the order of 6.8% of gross domestic product,” Mr. Rangarajan said. “We need to cut it by at least 1%-1.5% next (fiscal) year.”But any premature withdrawal of the stimulus runs the risk of affecting the economic recovery.

Export shrinks slower at 11.4%

NEW DELHI: India's exports contracted at a lower rate in October than in recent months following a positive growth in a number of sectors in the
recent months, suggesting that demand may be beginning to look up in the developed world.

A part of the improvement could, however, be due to the base effect, a decline in exports in October 2008 due to a sudden deterioration in global trade because of the financial crisis. That the heavyweight sectors such as engineering goods and readymade garments continued to decline also take some sheen off the October numbers. Exports contracted 11.4% in October 2009, the thirteenth straight month of decline. This is still seen as an improvement as the fall in exports was as high as 39.2% in May 2009.

“If the current trend continues, exports are expected to turn positive in January,” commerce secretary Rahul Khullar said. However, the overall export figures for the fiscal would be marginally lower than exports in 2008-09, he added.

The improvement is due to a number of high value exports sectors beginning to grow in recent months. These include drugs and pharma, cotton yarn fabrics, electronic goods, and iron ore. Some of these had actually started growing from August 2009 itself. “This is the first vindication of the green shoot hypothesis,” Mr Khullar said.

Amid a debate over stimulus withdrawal, this sign of pickup could invite suggestion of roll back for exports sector as well. Mr Kullar dismissed any such notion saying, “There shouldn’t be a roll-back just because one is seeing the first signs of some recent recovery”.

With Christmas and New Year pushing up demand in the Western markets, including the EU and the US, exporters are hopeful of demand going up and exports turning positive by the beginning of the new year.

Despite the better outlook, they still feel a need for more help from the government. “There should be an immediate increase in duty drawback rates to provide price competitiveness to Indian exporters so that it gives a fillip to exports,” said A Sakthivel, president of the Federation of Indian Export Organisations, an alliance of export promotion bodies in the country.

The decline in exports had peaked at 39% in May this year, and then subsequently started going down. In September 2009, the fall in exports was a relatively low 13.8%.

The real story at the G20

The press coverage of the G20 summit over the weekend was, understandably, dominated by the row over a so-called Tobin tax on financial transactions. Understandable, I say, because it had a bit of everything: a punishment for nasty bankers, an embarrassment for Gordon Brown as what looks like a last-minute attempt to grab the headlines failed and a simple tax idea that most people understand.

But in reality the Tobin tax suggestion wasn’t discussed all that much behind the scenes. The ministers have now handed over that task to the International Monetary Fund, which will return in April and tell us what kind of model for an international financial tax would work best (there are other models, and the one most people are now focusing features in my news story in tomorrow’s paper).

The real subject of deep and heated discussion – upon which I hear the “sherpas” (political behind-the-scenes negotiators) in all camps were still debating at six in the morning on Saturday – was climate financing. Now, before you start to nod off (as I am inclined to whenever anyone uses combinations of words as unpromising as that) this is important, and interesting. The forthcoming Copenhagen Summit partly revolves around trying to work out who should be paying for forthcoming efforts to cut carbon emissions. This G20 debate was supposed to iron out some kinks ahead of Copenhagen. As it happens there was a nasty disagreement which could end up making Copenhagen a serious embarrassment.

In short, the rich nations went into the meeting expecting the emerging powerhouses such as Brazil, India and China to agree to pay at least something towards these future costs (which include everything from investing in more efficient plants and power stations to creating carbon trading platforms to paying for research to find new green technologies). The emerging nations flatly refused.

In some senses, you can see why. 75pc of histoic carbon emissions came from the developed world. So the climate crisis (as one is supposed to call it) should be seen as a legacy left by rich nations, from which they have benefited in the past, and for which they should pay for the clean-up. However, it’s not quite that simple. 90pc of future emissions will be generated by the developing and emerging world. The rich countries are insisting, as such, that they pay their part.

It was a nasty stand-off and the weekend ended without any agreement on it. This is really worrying for all kinds of reasons. It reminds me of the stalemates we saw in the dying days of the Doha Round of world trade talks, and we know where that ended (though the WTO is planning to exhume the talks in a summit at the end of the month). Anyway, the days are ticking down to Copenhagen, and it looks increasingly like one of those occasions where politicians will have to use grand gestures and statements to mask the fact that in truth they can’t find any common ground at all.

Moody’s Won’t Raise India Rating Unless Debt Reduced

Nov. 10 (Bloomberg) -- India’s sovereign rating won’t be raised unless the government works toward reducing its budget deficit and debt, according to Moody’s Investors Service.

“Unless we see some hope for signs of improvement in government finance, India’s rating won’t be raised,” Moody’s Senior Vice President Tom Byrne said in an interview in Shanghai today. “We don’t see that yet.”

Prime Minister Manmohan Singh’s government is borrowing a record 4.51 trillion rupees ($97 billion) this year to fund stimulus packages and revive growth in Asia’s third-largest economy, forecast by the central bank to expand at the slowest pace in seven years. Higher borrowing is expected to widen the budget deficit to a 16-year high of 6.8 percent of gross domestic product in the 12 months to March 2010, according to the finance ministry.

“India has a lot of domestic-currency debt, a very high debt-to-GDP ratio, and a very high budget deficit year after year,” Bryne said. Moody’s has a Baa3 rating on India’s long- term foreign debt, the lowest investment grade.

A widening deficit made Indian bonds the worst performers this year among 10 Asian local-currency debt markets outside Japan, with a 5.88 percent loss, according to indexes compiled by HSBC Holdings Plc. The benchmark 10-year bond yield has added 2.04 percentage points, the biggest gain in at least a decade, to 7.30 percent, according to Bloomberg data.

Asset Sales

Standard & Poor’s, which has a BBB- long-term credit rating on India, the lowest investment-grade level, cut the outlook on the nation’s debt to negative from stable in February this year on concerns over deteriorating government finances.

Moody’s comments come after Singh’s government last week announced plans to sell stakes in state-run companies, which analysts expect will help reduce the budget deficit.

Prime Minister Singh said Nov. 8 that he hopes the decision would lead to “faster progress” on government sales.

The disinvestment program “is going to add to the amount of money available to the government,” said Ashok Jha, chairman of MCX Stock Exchange, which trades in currency and interest- rates futures. “The first impact of this is that the high fiscal deficit will decline substantially.”

India’s cabinet on Nov. 6 approved a plan requiring all state-run companies to make sure that 10 percent of shares are publicly traded and said proceeds from share sales should be used for spending on social programs such as creating jobs and building roads, ports and utilities.

Ratings company DBRS Inc. last month cut India’s long-term foreign- and local-currency debt rating outlook to negative from stable, citing “discomfort” with the “high” budget deficit.

Financial sector reforms to quicken, says PM

NEW DELHI (Reuters) - India's long-stalled reforms to its financial sector gained momentum on Sunday after Prime Minister Manmohan Singh said he would push through legislative changes, including the insurance sector which foreign players are eyeing.

Investors have been keenly awaiting signs of a pick-up in the pace of economic reforms in India after disappointment that the re-elected Congress party did not speed up the process after May's elections.

"We are also better placed than at any time in the recent past to push the reform process forward," he told the World Economic Forum in Delhi.

Singh also said his government would take steps in the 2010/2011 fiscal year to wind down economic stimulus measures for Asia's third largest economy.

"Some of the reforms needed, especially in insurance, involve legislative changes. We have taken initiatives in this area and will strive to build the political consensus needed for these legislative actions to be completed," Singh said.

He said India needed to develop long-term debt markets, deepen corporate bond markets, strengthen the insurance and pensions sectors, improve futures markets for better price discovery and regulation.

"All these issues will be addressed through gradual but steady progress in financial sector reforms to make the sector more competitive while ensuring an efficient regulatory and oversight system," Singh said.

He also said the government would accelerate the sale of stakes in state-run companies

Reforms in Singh's first 2004-2009 government stalled due to pressure from his communist allies, now out of the ruling coalition after election defeats in May.

"The tone on reforms is very bullish and the government is well positioned to carry out these reforms because of the political mandate," D.K. Joshi, a senior economist at Indian ratings agency Crisil in Mumbai.

The government plans to introduce in parliament by December bills proposing the raising of foreign stake limits in insurers to 49 percent from the present 26 percent and opening up the pension sector to private and foreign firms.

It will also propose a law to cut its holding in top lender State Bank of India to 51 percent.


STIMULUS AND GROWTH

The prime minister said growth in the next fiscal year, assuming a normal monsoon season, was expected to be more than 7.0 percent compared with a 6.5 percent forecast for the 2009/2010 fiscal year. The government has a medium-term target of 9 percent growth per annum, needed to help reduce widespread poverty.

Singh said the Indian economy grew 6.7 percent in 2008/2009 with the help of an economic stimulus package.

"We will take appropriate action next year to wind this down," he said, without giving any details on how the government planned to exit its fiscal stimulus.

Economist Joshi said the timing of the stimulus withdrawal was critical to ensure the economy did not suffer.

"Stimulus is unlikely to be withdrawn before private consumption pick up is ensured. It’s not an on-off switch. They will start withdrawing gradually and I expect some fiscal stimulus being withdrawn in next year's budget," Joshi said.

Finance Minister Pranab Mukherjee said last week that the government would maintain its fiscal stimulus for the time being until uncertainty eased over the impact of poor monsoon rains and the global economic outlook.

The Reserve Bank of India has started what it calls the first phase of the exit from its easy monetary policy, worried about inflationary pressures.

India May Lead G-20 in Stimulus Exit as Singh Signals Wind Back

Nov. 9 (Bloomberg) -- India may be among the first Group of 20 nations to begin winding back fiscal stimulus after Prime Minister Manmohan Singh said faster economic growth would allow the measures to be withdrawn.

“There are clear signs of an upturn in the economy,” Singh told the India Economic Summit organized by the World Economic Forum in New Delhi yesterday. “Like other countries we resorted to a significant stimulus and we will take appropriate action next year to wind this down.”

Singh’s comments are at odds with policy makers from the U.S., Japan, Australia and other Group of 20 nations who said at the weekend it’s too early to withdraw fiscal steps designed to support global recovery. India’s central bank last month began to tighten monetary policy amid concerns that an inflation flare-up may hit the pockets of close to 800 million Indians who live on less than $2 a day.

“Demand in India has picked up and a continuation of stimulus may not be necessary next year,” said Arun Duggal, chairman of Shriram Transport Finance Co. Ltd., the nation’s biggest financier of trucks and buses. “Stimulus should remain in developed countries as their economies are in a more fragile state and could tip backward.”

Singh said India’s economy may grow 6.5 percent in the year ending March 31, constrained by weak monsoon rains that hurt crop production. With better rainfall in the four-month season starting June 2010, the economy may expand over 7 percent in the year commencing April 1, he said.

Wal-Mart

India’s economic strides prompted Wal-Mart Stores Inc., the world’s largest retailer that has a wholesaling venture with the local Bharti Group, to open as many as 40 more “cash & carry” stores in the country. Wal-Mart opened its first Indian wholesale store on May 30, with initial plans to start 10 or 15 more outlets during the next three years.

Tata Steel Ltd., India’s biggest producer of the alloy, reported October sales rose 38 percent, while sales at Bajaj Auto Ltd., the nation’s second-largest motorcycle maker, gained 46 percent during the month.

India began to tighten monetary policy as the central bank forecasts inflation to accelerate to 6.5 percent by March 31 from 1.51 percent. Asset prices have been climbing as well, evidenced by the 68 percent rise in the key Sensitive index on the Bombay Stock Exchange.

The Reserve Bank of India on Oct. 27 ordered lenders to keep more cash in government bonds, raising the statutory liquidity ratio to 25 percent from 24 percent. Governor Duvvuri Subbarao said it was appropriate for the central bank to exit monetary stimulus in a “calibrated way.”

‘Quite Appropriate’

Raghuram Rajan, former chief economist at the International Monetary Fund and now a professor at the University of Chicago, said it was “quite appropriate” for the Indian government to think about winding down fiscal stimulus.

“I am not saying do it today, but do it over the next year and going forward,” Rajan said in New Delhi yesterday.

India’s central bank needs to consider an exit from monetary stimulus as interest-rate policy needs to be conducted with “foresight,” Rajan said. “By the time inflation starts picking up, by the time capacity constraints start showing, its too late to do it with monetary policy.”

China also risks faster inflation and asset bubbles as Asia’s second-biggest economy pursues “excessive growth,” Yao Jingyuan, the statistics bureau’s chief economist, said at a forum in Beijing last week.

Budget Deficit

The Chinese economy is assured of expanding 8 percent in 2009, meeting the government’s target, according to Yao.

India may consider rolling back fiscal stimulus early in the year starting April 1, Montek Singh Ahluwalia, deputy chairman of the Planning Commission, said in New Delhi yesterday. This would help reduce a budget deficit estimated to reach a 16- year high of 6.8 percent of gross domestic product this year.

“The worst is behind us though the path of global recovery will be long and uncertain,” Prime Minister Singh said yesterday. “India has been able to face the global economic downturn better than most other countries in the world.”

The world economy may shrink 1.1 percent in 2009, according to IMF estimates. IMF Managing Director Dominique Strauss-Kahn warned Oct. 23 of the risk of a double-dip recession if countries implement exit strategies too soon.

U.S. Treasury Secretary Timothy Geithner told reporters after a meeting of G20 finance ministers in Scotland on Nov. 7 that “it’s too early” to “lean against the recovery.”

Japan, Australia
Japanese Finance Minister Yoshihiko Noda said it’s too soon to start unwinding measures, saying the recovery in his country “still lacks sustainability.” Australian Treasurer Wayne Swan said yesterday government stimulus shouldn’t yet be retracted as winding up the program would threaten jobs and economic recovery.

“The developed countries seem to be very cohesive in thinking that stimulus should continue,” Rana Kapoor, chief executive officer at Mumbai-based Yes Bank Ltd. said in an interview with Bloomberg News yesterday. “Every nation needs to watch out for country-specific conditions and take actions best suited for them, and that’s what India is doing.”

Countries should withdraw stimulus too late rather than too early as the global recovery is likely to be “sluggish,” the IMF said in a report prepared for this weekend’s meeting of G20 officials in St. Andrews, Scotland.

India’s next budget is due to be released in late February 2010 by Finance Minister Pranab Mukherjee, who attended the weekend meeting of G20 officials.

“World demand will pick up only slowly,” Singh said yesterday. “Our strategy therefore must aim at sustaining a high rate of growth on the strength of strong domestic demand.”

Why is India buying IMF gold?

The International Monetary Fund has sold 200 tonnes of gold to the Reserve Bank of India (RBI) for $6.7 billion, quietly executing half of a long-planned bullion sale that has threatened to slow gold's ascent.

The deal will increase India's gold holdings to the tenth largest among central banks.

Analysts say one of the reasons why the RBI was buying gold from the IMF was to shore up its gold holdings.

The latest purchase will lift its share of gold holdings from near 4 percent to about 6 percent, much less than most of the developed world but four times China's share.

India's foreign exchange reserves held at the central bank totalled $285.5 billion on Oct. 23, of which gold comprised just over $10 billion. India held 357.8 tonnes of gold reserves as of March 31, 2009, according to the latest data.

India built up its gold reserves to over 20 percent of its foreign reserves in 1994 after a balance of payments crisis in 1991. But the proportion of gold has since fallen significantly as total reserves swelled.

Another reason behind the buying may be India's push for a larger voting share in the IMF.

India, with other emerging economies, has pressed for greater influence in world economic affairs as it has grown rapidly into a $1.2 trillion economy.

India, along with China, has been pressing for a larger representation in the IMF and had promised to augment its resources for lending to developing countries. By buying gold from the IMF, New Delhi may be trying to assert its authority in the global economic stage.

Some economists say the move could be aimed at diversifying its reserves holdings which focuses on the US dollar.

The RBI does not officially talk about its diversification strategy.

On Tuesday, the RBI said the purchase of IMF's gold was done as part of its foreign exchange reserve management.

The RBI's gold purchase has not had any immediate impact on gold demand as prices are already high and buyers are staying away.

But analysts say the RBI move at the current high price is expected to raise the psychological price level at which Indians buy gold.

This would also help raise the demand for gold in the medium term.

Gold in the IMF

Gold played a central role in the international monetary system until the collapse of the Bretton Woods system of fixed exchange rates in 1973. Since then, the role of gold has been gradually reduced. However, it is still an important asset in the reserve holdings of a number of countries, and the IMF remains one of the largest official holders of gold in the world. Consistent with the new income model for the Fund agreed in April 2008, on September 18, 2009, the IMF Executive Board approved gold sales strictly limited to 403.3 metric tons, representing one eighth of the Fund's total holdings of gold. Resources linked to these gold sales will also help boost the Fund's concessional lending capacity.

How the IMF acquired its gold holdings

The IMF holds 103.4 million ounces (3,217 metric tons) of gold at designated depositories. The IMF's total gold holdings are valued on its balance sheet at SDR 5.9 billion (about $9.2 billion) on the basis of historical cost. As of August 28, 2009, the IMF's holdings amounted to $98.8 billion at current market prices.

A portion of these holdings was acquired after the Second Amendment of the IMF's Articles of Agreement in April 1978. This portion, amounting to 12.97 million ounces (403.3 metric tons) with a market value of $12.4 billion as of August 28, 2009, is not subject to restitution to IMF member countries (see below), unlike gold the IMF acquired before 1978.

The IMF acquired the majority of its gold holdings prior to the Second Amendment through four main types of transactions.

•First, when the IMF was founded in 1944 it was decided that 25 percent of initial quota subscriptions and subsequent quota increases were to be paid in gold. This represents the largest source of the IMF's gold.
•Second, all payments of charges (interest on member countries' use of IMF credit) were normally made in gold.
•Third, a member wishing to acquire the currency of another member could do so by selling gold to the IMF. The major use of this provision was sales of gold to the IMF by South Africa in 1970–71.
•And finally, member countries could use gold to repay the IMF for credit previously extended.

The IMF's legal framework for gold

Role of gold. The Second Amendment to the Articles of Agreement in April 1978 fundamentally changed the role of gold in the international monetary system by eliminating the use of gold as the common denominator of the post-World War II exchange rate system and as the basis of the value of the Special Drawing Right (SDR). It also abolished the official price of gold and ended the obligatory use of gold in transactions between the IMF and its member countries. It furthermore required that the IMF, when dealing in gold, avoid managing its price or establishing a fixed price.

Transactions. Following the Second Amendment, the Articles of Agreement limit the use of gold in the IMF's operations and transactions. The IMF may sell gold outright on the basis of prevailing market prices, and may accept gold in the discharge of a member country's obligations (loan repayment) at an agreed price, based on market prices at the time of acceptance. Such transactions require Executive Board approval by an 85 percent majority of the total voting power. The IMF does not have the authority under its Articles to engage in any other gold transactions—such as loans, leases, swaps, or use of gold as collateral—nor does it have the authority to buy gold.

Restitution. The Articles also provide for the restitution of the gold the Fund held on the date of the Second Amendment (April 1978) to those countries that were members of the Fund as of August 31, 1975. Restitution would involve the sale of gold to this group of member countries at the former official price of SDR 35 per ounce, with such sales made to those members who agree to buy it in proportion to their quotas on the date of the Second Amendment. A decision to restitute gold requires support from an 85 percent majority of the total voting power. The Articles do not provide for the restitution of gold the Fund has acquired after the date of the Second Amendment.

How and when the IMF has used gold in the past

Outflows of gold from the IMF's holdings occurred under the original Articles of Agreement through sales of gold for currency, and via payments of remuneration and interest. As noted, since the Second Amendment of the Articles of Agreement, outflows of gold can only occur through outright sales. Key gold transactions included:

• Sales for replenishment (1957–70).The IMF sold gold on several occasions to replenish its holdings of currencies.

• South African gold (1970–71). The IMF sold gold to member countries in amounts roughly corresponding to those purchased from South Africa during this period.

• Investment in U.S. government securities (1956–72). In order to generate income to offset operational deficits, some IMF gold was sold to the United States and the proceeds invested in U.S. government securities. Subsequently, a significant buildup of IMF reserves prompted the IMF to reacquire this gold from the U.S. government.

• Auctions and "restitution" sales (1976–80). The IMF sold approximately one-third (50 million ounces) of its then-existing gold holdings following an agreement by its member countries to reduce the role of gold in the international monetary system. Half of this amount was sold in restitution to member countries at the then-official price of SDR 35 per ounce; the other half was auctioned to the market to finance the Trust Fund, which supported concessional lending by the IMF to low-income countries.

• Off-market transactions in gold (1999–2000). In December 1999, the Executive Board authorized off-market transactions in gold of up to 14 million ounces to help finance the IMF's participation in the Heavily Indebted Poor Countries (HIPC) Initiative. Between December 1999 and April 2000, separate but closely linked transactions involving a total of 12.9 million ounces of gold were carried out between the IMF and two members (Brazil and Mexico) that had financial obligations falling due to the IMF. In the first step, the IMF sold gold to the member at the prevailing market price and the profits were placed in a special account invested for the benefit of the HIPC Initiative. In the second step, the IMF immediately accepted back, at the same market price, the same amount of gold from the member in settlement of that member's financial obligations. In the end, these transactions left the balance of the IMF's holdings of physical gold unchanged.

The IMF's strictly limited gold sales approved in September 2009

On September 18, 2009, the Executive Board approved the sale of 403.3 metric tons of gold (12.97 million ounces), which amounts to one-eighth of the Fund's total holdings of gold. In accordance with the priority of avoiding disruption of the gold market, the Executive Board adopted modalities for the gold sales consistent with guidelines it had earlier established (see below).

This decision is a key step in implementing the new income model agreed in April 2008 to help put the IMF's finances on a sound long-term footing. A central component of the new income model is the establishment of an endowment funded by the profits from the sale of a strictly limited portion of the Fund's gold, being the gold the Fund has acquired after the Second Amendment of the Articles. In July 2009, the Executive Board agreed that resources linked to gold sales would also help boost the Fund's concessional lending capacity.

In August 2009, the European Central Bank and other central banks announced the renewal of their agreement (Central Bank Gold Agreement) on gold sales, which are not to exceed 400 metric tons annually and 2,000 metric tons over the five years starting on September 27, 2009. The announcement notes that sales of 403 tons of gold by the IMF can be accommodated within these ceilings. This ensures that gold sales by the Fund would not add to the announced volume of sales from official sources.

Executive Board guidelines for gold sales

The IMF's Executive Board has reaffirmed the long-standing principle that the Fund has a systemic responsibility to avoid causing disruptions that would adversely affect gold holders and gold producers, as well as the functioning of the gold market. To that end, in February 2008, the Board endorsed the following guidelines to govern the envisaged gold sales:

(i) Sales should be strictly limited to the amount of gold that the Fund has acquired since the Second Amendment of the Articles of Agreement (12,965,649 fine troy ounces or 403.3 metric tons, which represent one-eighth of the Fund's total holdings).

(ii) The Fund's gold sales should not add to the announced volume of sales from official sources.

(iii) The scope for sales of gold to one or more official holders should be explored. This would be advantageous because such transactions would redistribute official gold holdings without changing total official holdings. There would also be the practical advantage that the Fund could receive sales proceeds earlier, thereby beginning to generate income from an endowment sooner.

(iv) Absent sufficient interest from other official holders to purchase gold directly from the Fund, phased on-market sales would represent the most appropriate modality for potential gold sales. This would follow the approach adopted successfully over a number of years by current Central Bank Gold Agreement participants.

(v) A strong governance and control framework, together with a high degree of transparency, would be essential for gold sales conducted by the Fund. A clear, transparent communications strategy, including regular external reporting on sales, should be adopted, in order to assure markets that the gold sales are being conducted in a responsible manner.

General rules of Warren Buffett

Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.

It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

You're neither right nor wrong because other people agree with you. You're right because your facts are right and your reasoning is right—and that's the only thing that makes you right. And if your facts and reasoning are right, you don't have to worry about anybody else.

Our favourite holding period is forever.

When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is usually the reputation of the business that remains intact.

Risk comes from not knowing what you're doing.

If you don't know jewelry, know the jeweler.

If you don't feel comfortable owning something for 10 years, then don't own it for 10 minutes.

There seems to be some perverse human characteristic that likes to make easy things difficult.

One's objective should be to get it right, get it quick, get it out, and get it over... your problem won't improve with age.

A public-opinion poll is no substitute for thought.

In the insurance business, there is no statute of limitation on stupidity.

If a business does well, the stock eventually follows.

The most important quality for an investor is temperament, not intellect... You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.

The future is never clear, and you pay a very high price in the stock market for a cheery consensus. Uncertainty is the friend of the buyer of long-term values.

We will only do with your money what we would do with our own.

Occasionally, a man must rise above principles.

It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.

Of one thing be certain: if a CEO is enthused about a particularly foolish acquisition, both his internal staff and his outside advisors will come up with whatever projections are needed to justify his stance. Only in fairy tales are emperors told that they are naked.

When asked how he became so successful in investing, Buffett answered: we read hundreds and hundreds of annual reports every year.

"I never buy anything unless I can fill out on a piece of paper my reasons. I may be wrong, but I would know the answer to that. "I'm paying $32 billion today for the Coca Cola Company because..." If you can't answer that question, you shouldn't buy it. If you can answer that question, and you do it a few times, you'll make a lot of money."

You ought to be able to explain why you're taking the job you're taking, why you're making the investment you're making, or whatever it may be. And if it can't stand applying pencil to paper, you'd better think it through some more. And if you can't write an intelligent answer to those questions, don't do it.

I really like my life. I've arranged my life so that I can do what I want.

If you gave me the choice of being CEO of General Electric or IBM or General Motors, you name it, or delivering papers, I would deliver papers. I would. I enjoyed doing that. I can think about what I want to think. I don't have to do anything I don't want to do.

Largest Gold Reserves by Country

An interesting slideshow on CNBC.com listing the largest gold reserves by country (or institution). What makes this list even more interesting is aside from the raw value of gold, we also can see how prominent gold is as a percentage of total foreign reserves. This can show not only the discrepancy amongst countries, but if central banks decide to further diversify into gold - how much potential demand there could be to move from say a mid single digit percentage of the yellow metal, to something in say the 20-30% range.

What is striking is how large a proportion of European countries' foreign reserves are in gold (Portugal!), whereas Asians have yet to really make their mark. There was a huge fuss earlier this year when China revealed it had been buying quietly in the background to move up this list, but as a percentage of reserves the amount is still tiny. [Apr 25, 2009: China has Begun Building Gold Reserves] Unfortunately for China, it is very hard for them to make good-sized acquisitions without alerting the entire world, since their footprint is so massive.

I've compiled the data in chart form below, but first, two notes

#1 Of course America does not believe in foreign reserves - so the last column is a big fat "Not Applicable". Far better to spend over your means indefinitely than to have national savings; let the rest of the world save for us.... we excel at the spending part.

#2 The SPDR Gold ETF (GLD) has now grown to such a size that if it were a stand alone country it would now be the 6th largest holder of gold in the world. That's remarkable. Even more remarkable, 1 man - hedge fund manager John Paulson - owns nearly 10% of this gold ETF. [May 16, 2009: John Paulson Continues to Pile into SPDR Gold (GLD)] By the transitive theory, this would make John Paulson, if he was a stand alone country, somewhere in the 16- 20th largest holder of gold.

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Berkshire Buys Burlington in Buffett’s Biggest Deal

Nov. 3 (Bloomberg) -- Warren Buffett’sBerkshire Hathaway Inc. agreed to buy railroad Burlington Northern Santa Fe Corp. in what he described as an “all-in wager on the economic future of the United States.”

The purchase, the largest ever for Berkshire, will cost the company $26 billion, or $100 a share in cash and stock, for the 77.4 percent of the railroad it doesn’t already own. Including his previous investment and debt assumption, the deal is valued at $44 billion, Omaha, Nebraska-based Berkshire said today in a statement. The railroad’s stock closed yesterday at $76.07.

Berkshire has been building a stake in the Fort Worth, Texas-based railroad since 2006 as Buffett looked for what he called an “elephant”-sized acquisition allowing him to deploy his company’s cash hoard, which was more than $24 billion at the end of June. Trains stand to become more competitive against trucks with fuel prices high, he has said.

“It is Warren being Warren, taking advantage of a market that is soft at a time when the possibility for competitive bids is relatively low,” said Tom Russo, a partner at Gardner Russo & Gardner, which holds Berkshire shares. “He looks at this as a business that has advantages against other forms of transportation.”

At $100 a share, Buffett is paying 18.2 times Burlington Northern’s estimated 2010 earnings of $5.51, according to the average analyst projection in a Bloomberg survey. That compares with the 13.4 multiple for the Standard & Poor’s 500 Index as of yesterday’s close. Shares of Burlington Northern, the largest U.S. railroad, dropped 13 percent in the 12 months through yesterday.

Union Pacific, CSX

Competing railroad Union Pacific Corp.’s ratio was 13, while Jacksonville, Florida-based CSX Corp.’s was 13.1, Bloomberg data show.

Union Pacific rose $4.35, or 7.9 percent, to $59.41 at 4 p.m. in New York Stock Exchange composite trading. CSX climbed 7.3 percent. Burlington Northern surged to $97. Berkshire Class A shares rose $1,700, or 1.7 percent, to $100,450.

The deal culminates a search by Buffett, 79, that sent him to Europe looking for possible acquisitions and lamenting in letters to shareholders that he and Vice Chairman Charles Munger couldn’t find companies they considered large enough to meaningfully add to annual earnings.

Buffett needs “elephants in order for us to use Berkshire’s flood of incoming cash,” he said in his annual letter to shareholders in 2007. “Charlie and I must therefore ignore the pursuit of mice and focus our acquisition efforts on much bigger game.”

Trains, Trucks

Burlington Northern, with pretax income of $3.37 billion on revenue of $18 billion last year, would be Berkshire’s second- largest operating unit by sales. The McLane unit, which delivers food to grocery stores and restaurants by truck, earned $276 million on revenue of $29.9 billion in 2008.

Berkshire’s largest business is insurance, with units including auto specialist Geico Corp. Buffett, who is the company’s chairman and chief executive officer, has said he likes insurance because he gets to invest the premiums paid by customers until the cash is needed to pay claims. The insurance businesses last year collectively earned $7.51 billion on revenue of $30.3 billion.

Buffett will use $16 billion in cash for the deal, half of which is being borrowed from banks and will be paid back in three annual installments, he told the CNBC. Berkshire will have more than $20 billion in consolidated cash after the purchase, he said.

Cash Hoard

“It doesn’t mean we’re out of business, but it does mean that we won’t be making any huge deals for a while,” Buffett told the network today. He said earlier this year the company needs at least $10 billion in cash to be ready for unforeseen events such as catastrophe claims at its insurance units.

Berkshire would get $264 million from Burlington Northern if the railroad’s board accepts a higher bid, according to a regulatory filing today.

Buffett built Berkshire into a $150 billion company buying firms that he deems to have durable competitive advantages. His largest purchases include the 1998 deal for General Reinsurance Corp. for more than $17 billion. Buffett expanded into power production with the purchase of MidAmerican Energy Holdings Co., and last year bought Marmon Holdings Inc., the collection of more than 100 businesses, from the Pritzker family. Marmon’s Union Tank Car unit manufactures and leases railroad cars.

He expects the economy to recover, he said in an interview in September with his company’s Business Wire unit.

“We are still tossing out 14 trillion worth of product a year,” he said. “It will return. It’s already returned with most people in most ways, but it’s not back 100 percent. It’ll get there.”

‘Simple Bet’

The U.S. economy returned to growth in the third quarter after a yearlong contraction as government incentives spurred consumers to spend more on homes and cars. The world’s largest economy expanded at a 3.5 percent pace from July through September, Commerce Department figures showed last week.

“It’s a pretty simple bet,” said Mario Gabelli, CEO of Gamco Investors Inc., which has holdings in Berkshire and Burlington Northern. “Warren knows the assets. He’s been involved in basic businesses like this for years.”

Buffett is increasing his stake in an industry that doesn’t have any competitors for certain types of freight. Federal law requires some chemicals to be moved only by rail.

Railroads burn less diesel fuel than trucks for each ton of cargo carried, giving companies such as Burlington Northern and Omaha-based Union Pacific a grip on bulk commodities such as coal. That fuel-efficiency advantage also gives railroads a share of the profits from moving goods such as Asian imports of cars and other consumer goods sent to U.S. West Coast ports.

Fuel Prices

From ships, containers are loaded onto railcars to be hauled to so-called intermodal terminals, where they’re transferred to trucks for the final leg of their journey.

Buffett said in 2007 that railroads may prosper at the expense of trucks. “As oil prices go up, higher diesel fuel raises costs for rails, but it raises costs for its competitors, truckers, roughly by a factor of four,” Buffett told shareholders in 2007 at his company’s annual meeting. “There could be a lot more business there than there was in the past.”

Berkshire’s board approved a 50-to-1 split of its Class B shares as part of the acquisition plan, the company said in a second statement. Berkshire will schedule a shareholder meeting to vote on an amendment to the company’s certificate of incorporation that’s needed to split the stock. B share typically trade for about a thirtieth of the price of A shares.

Stock Split

Most of the shares exchanged for Burlington Northern stock will be Class A shares, Berkshire said. Splitting the B shares is designed to accommodate the smallest holders who elect for a tax-free swap of the railroad’s stock, it said.

Goldman Sachs Group Inc., Evercore Partners Inc., and Cravath Swaine & Moore LLP are advising Burlington. Berkshire didn’t disclose a financial adviser and said Munger Tolles & Olson LLP furnished legal advice.

Matthew Rose, the chief executive officer of Burlington Northern, said he struck the deal with Buffett after the two met in Texas. Buffett, named by Forbes as the second-richest American, was visiting because he has other business interests in the state, Rose said.

“We spent a couple hours talking about the economy and the business,” Rose told Bloomberg Television. “The next day I got a call. He asked me to meet on a Friday night down in downtown Fort Worth. It was a relatively short conversation; he told me what he wanted to do. The next day we fired up the process.”

Antitrust Review

Burlington Northern operates 32,000 miles of track, with 6,700 locomotives, according to its Web site. Most of the carrier’s network is west of the Mississippi, where it competes with Union Pacific.

The U.S. Department of Justice will conduct an antitrust review, which Burlington expects to be completed by the first quarter of next year, the company said today in a conference call with analysts and investors.

Burlington Northern said two-thirds of the shares that aren’t held by Berkshire must vote in favor of the transaction for it to proceed under Delaware law. The railroad said it anticipates a shareholder meeting in the first quarter of 2010 and the completion of the transaction “very shortly thereafter.”

Health Claims FAQ’S

What is Mediclaim?

Mediclaim is a health insurance to cover hospitalization expenses of an individual. A health insurance policy is a contract between an insurance company and an individual / group in which the insurance company agrees to provide health insurance cover at a premium pre fixed by the insurance company on the basis of the age and medical conditions of the client. The policy is for a period of one year and can be renewed every year after paying the premium. The Insurance company offers cashless as well reimbursement facilities through a Third Party Administrator. A health insurance policy can be taken by an individual for himself and his family. A corporate can also take a group policy for its employees and their family.

What do you mean by floater policy? How does it work?

Floater is a privilege offered to the client only in case he opts for "Group Mediclaim Policy". Unlike the individual policy, where a family (Husband / Wife / children) is covered for the Sum Assured so desired, independent of each other, and pays the premium accordingly, in a Floater - a float amount is shared by the family members Or by the employee families.

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What is a Third Party Administrator (TPA)?

A THIRD PARTY ADMINISTRATOR (TPA) means any Company who has obtained license from IRDA to practice as a third party administrator and is appointed by the Insurance Company for the purpose of servicing their health insurance policies.

What do you mean by Inpatient hospitalization and Daycare hospitalization?

Inpatient hospitalization is the event of hospitalization for treatment where patient stay in the hospital for minimum 24 hrs. Daycare hospitalization is the event of hospitalization for treatment where patient stay is less than 24 hrs.


Note: Policy will not cover the hospitalization of less than 24 hrs, except for daycare diseases as mentioned in policy daycare list

What do you mean by Network / Non-network Hospitalization?

A Hospital, which has an agreement with TPA for providing Cashless treatment, is referred to as a 'Network Hospital'. List of network hospital is available in user guide / TPA website. Cashless facility is provided ONLY at the network hospitals. Non-network hospitals are those who are not empanelled by the TPA and any policyholder seeking treatment in these hospitals will have to pay for the treatment and later claim as per normal procedure.

What is Domiciliary Hospitalization?

Medical treatment exceeding a defined period for such illnesses / diseases / injury which in the normal course would require care and treatment at a hospital/nursing home but actually taken whilst confined at home in India under any of the following circumstances :

The condition of the patient is such that he / she cannot be removed to the hospital / nursing home or
The patient cannot be removed to hospital / nursing home for lack of accommodation therein
This hospitalization will however not cover pre and post hospitalization and treatment for conditions excluded in the policy. For details refer the policy documents.

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What is a Health / Identity Card?

Identity card means the card issued to the Insured Person by the TPA to avail Cashless facility in the Network Hospital. The card may be a Photo identity card or a non photo identity card. It is mandatory for the insured to carry an identity card for the purpose of admission into the hospital.

What are Pre and Post hospitalization expenses?

PRE-HOSPITALIZATION: Relevant medical expenses incurred during the defined period prior to hospitalization on disease / illness / injury sustained will be payable.

POST-HOSPITALIZATION: Relevant medical expenses incurred during the defined after hospitalization on disease / illness / injury sustained will be payable.

Note: Pre & Post Hospitalization expenses are payable only when the main hospitalization claim is admissible.

What is Cashless access?

In the cashless access, TPA will authorize the hospital for the treatment of Insured. The payment shall be made directly by the TPA to the hospital for the amount sanctioned/authorized (subject to Policy Terms, exclusions and Conditions).

How does Cashless access work?

Each person covered under the Policy will be issued a Health / identity card. Whenever there is a need for hospitalization the policyholder should obtain an Authorization Letter from TPA. The authorization letter will indicate the name of the insured/patient, the name of the hospital where treatment is required, the nature of illness / disease for which treatment is required and the monetary limit above which the insured / patient will have to pay. The policyholder will have to submit this authorization letter along with the identity card given by TPA to the admission counter in the hospital.

How does one obtain the Authorization letter?

The policyholder is required to fill the request for pre- authorization letter and send through fax/other means to the nearest TPA office mentioned in the user Guide or TPA web site. TPA will scrutinize the request for authorization letter and send an authorization letter or regret letter. Request for pre-authorization letter are available with TPA office or can be downloaded from TPA website.

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Can a request for Authorization for cashless be declined?

Yes, a request for authorization for cash less access may be declined if,

Inadequate / vague / wrong information is provided and the TPA is unable to get access to additional information.
The ailment / disease for which hospitalization is required is not covered by insurance.
The person does not have adequate insured amount left to cover the hospitalization costs.
This only means that cashless access is declined, AND IS IN NO WAY TO BE CONSTRUED AS DENIAL OF TREATMENT. The policyholder must obtain the treatment as per his/ her treating doctor’s advice.


The denial of pre-authorization letter shall not be construed to mean that the policyholder cannot claim under the terms, exclusions and conditions of the policy. In such cases you are advised to file your claim for reimbursement and TPA will settle the claim as per your policy terms and conditions.

How does hospitalization for Planned Hospitalization work?

The request for Authorization (Pre- Authorization) for planned treatment has to be filled up. This form has to be filled up by the Doctor recommending Hospitalization. The form must be filled fully in Block letters indicating the Doctors Name, Registration Number and Telephone Phone number. Should TPA Medical Officer need any clarification he may contact your doctor before he initiates action on your request.
This request must reach TPA office before hospitalization.
Any change in the date of hospitalization, Hospital, nature of illness or surgeon who is going to perform the procedure will make the authorization invalid. A fresh authorization will have to be taken.
The authorization is valid only for Network Hospitals.
The authorization will be addressed to the hospital and sent to the patients address or faxed to the hospital as desired by the policyholder.
A claim form must be collected from the nearest TPA / Insurance office or you could download the same from the site.
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What are the points one must note while getting hospitalized under cashless access scheme?

In order to secure admission on the appointed day, you are advised to register your name with the hospital well in advance.

Contact the admission desk of the Hospital / TPA Branch office
Show your TPA identity card and the Authorization letter given by TPA. The hospital will check the ID card and authorization letter.
Some network Hospitals may charge you registration fees / admission fees etc. These will have to be paid by the policyholder as these are not reimbursable under the policy.
In case the amount authorized by the TPA is less than the hospital estimate amount, you need to get hospitalized and submit final bill to TPA from hospital for enhancement of the authorization amount. Further TPA will discuss with Hospital.
How does Emergency Hospitalization under cashless access scheme work?

The policyholder is advised to get admitted immediately.


In case of admission to a Network Hospital the hospital will admit the patient as per the procedure of the hospital.


The hospitals will then contact TPA and send a request for authorization. At times the policyholder relative may be required to contact TPA for clarification.


The policyholder / relative must send the pre-authorization request completely filled. TPA will revert on receipt of the request.


If the authorization is given, the policyholder may

Pay for the non-medical expenses before leaving the hospital (non payable expenses- refer the policy documents)
Sign on relevant documents which will be sent to TPA by the hospital
In case cashless access is declined, this is in no way to be construed to be denial of treatment the policyholder must obtain the treatment as per his/ her treating doctor’s advice. The denial of pre-authorization letter shall not be construed to mean that the policyholder cannot claim under the terms and conditions of the policy from TPA.


In such cases you are advised to file your claim for reimbursement and TPA will settle the claim as per your policy terms and conditions.


In case the policyholder gets admitted to a non-network hospital then the hospitalization bills will be reimbursed subject to Terms, exclusions, Conditions and limitations of your Policy.

How does Billing and discharge under cashless access scheme work?

Sign the final bill and check the bill for correctness. TPA reserves its right of recovery of any amount due to it from the insured person for billed services, which are not covered by the policy.
Ensure that all supporting documents are attached to the bill.
You must pay all bills not associated with the condition for which hospitalization was authorized and the amounts in excess of the approved limit.
Retain a copy of the final bill and discharge summary.
Sign a claim form filled in all respects and give it to the hospital along with other authorization letter given by TPA before discharge.
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How does one get Reimbursement for pre and post hospitalization expenses under this scheme?

The Mediclaim Policy allows reimbursement of medical expenses incurred towards the ailment / disease for which hospitalization was necessitated prior to hospitalization and up to a certain number of days after discharge.



This is subject to the limits as described in the policy. The medical expenses incurred prior to Hospitalization are called pre- hospitalization expenses and those incurred subsequent to discharge as post Hospitalization expenses.



Send all bills in original with supporting documents along with a copy of the discharge summary and a copy of the authorization letter to the nearest TPA Office. TPA will scrutinize the claim and settle the bills subject to the overall limit of the policy, provided the main hospitalization claim is admissible. The bills must be sent to TPA within the defined period from the date of completion of treatment.

How does one get Reimbursements in case of treatment in non- network hospitals?

Cashless Hospitalization is available only in Network Hospitals. While it's recommended that you choose a network hospital you are at liberty to choose a non-network hospital also. In case you avail of treatment in a Non Network hospital, TPA will reimburse you the eligible amount of bills subject to the policy taken by the policyholder and claim being admissible.



The Policy Holders attention is drawn to the definition of Hospital in the Mediclaim policy. TPA should be contacted within few days from the time of admission with details of TPA card number, nature of illness, name & address of the Hospital/ Nursing Home/ Clinic, attending Doctor, Bed Number etc. The claim form can be collected from the nearest branch of the Insurance company / TPA office / TPA website. This claim form must be filled fully and sent to the nearest TPA office along with the following documents in original.



Claim Form properly filled in and signed by the claimant. Claim form is available at any of the DHS branches and also can be downloaded (see Download Forms)
Original Discharge Card / Summary from the hospital / nursing home.
Doctor's consultation reports / history.
Hospitalization and other medical Bills, Receipts in original.
Cash Memos from hospital / pharmacies supported by proper prescription.
Diagnostic test reports supported by a note from the attending medical practitioner / surgeon justifying such diagnostics. Surgeon's certificate stating the nature of the operation performed and surgeon's bill and receipt.
Note: Only expenses relating to hospitalization will be reimbursed as per the policy taken. All non-medical expenses will not be reimbursed.

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Can I claim for maternity event?

Individual Mediclaim policy does not cover maternity & related events. Maternity benefits are covered under the Group Mediclaim policy, subject to the payment of additional premium.

What is the maternity coverage limit?

If maternity cover is opted by group, sum insured sublimit for maternity and related events per policy year will be as per policy terms.

Which events are covered under maternity benefit?

Maternity coverage will cover Hospitalization expenses towards delivery (normal / operative) and hospitalization expenses towards complications of maternity during the antenatal & postnatal period. Antenatal and postnatal outpatient expenses are not covered under maternity benefit coverage, unless mentioned in the policy.

What do you mean by the term “MLC Copy”?

MLC Copy, a Medico – Legal certificate is the certificate signed by the policeman and issued by the hospital for medico legal cases (cases where police need to be kept informed). On admission to the hospital, hospital medical staff will identify the cause or nature of illness / disease / accident and if required will inform the police about the case. Policeman will visit the hospital to enquire the cause and sign the MLC Copy.

Ford posts surprise profit, sees profit in 2011

DETROIT (Reuters) - Ford Motor Co posted a $1 billion quarterly profit on Monday, defying Wall Street forecasts of a loss, as it cut costs and gained market share, leading it to raise its 2011 outlook to "solidly profitable" from break-even.

Ford's shares surged 8 percent as the surprising profit and increased outlook overshadowed news that the United Auto Workers union rejected a tentative cost-cutting deal with the automaker that would have brought its labor costs in line with U.S. rivals.

The only large U.S. automaker not to file for bankruptcy in 2009, Ford also said later on Monday it is seeking to extend its revolving credit facility from 2011 to 2013 and raise another $3 billion of capital through convertible debt and equity offerings.

The quarterly results provided more evidence that Ford has distanced itself from U.S. rivals General Motors Co and Chrysler, which have struggled to complete restructurings after emerging from government-funded bankruptcies earlier in 2009.

Ford seized North American market share from GM and Chrysler when they halted most production to prepare and execute their bankruptcy cases.

"We're creating a very strong business and we are not taking taxpayer money," Mulally said on a conference call with analysts. "So the advantages clearly outweigh any potential disadvantage."

Ford reported $1.3 billion of positive cash flow in the third quarter, its first positive quarter since the second quarter of 2007, and forecast positive cash flow in the fourth quarter. It burned through $4.7 billion of cash in the first half of 2009.

The company also reported its first quarterly operating profit in North America since the first quarter of 2005.

Ford said it was confident the global economy would be improving by 2011, but it added the near-term growth outlook "remains rather uncertain."
Some analysts believe Ford will be profitable in 2010.

"As the market starts to turn and sales volumes start to recover, Ford should be solidly in the black next year, certainly ahead of schedule," Autoconomy.com analyst Erich Merkle said.


CREDIT ARM'S PROFIT MORE THAN QUADRUPLED

Ford reported a net profit of $997 million, or 29 cents per share, for the third quarter, compared with a net loss of $161 million, or a 7 cents per share, a year earlier. Revenue fell $800 million to $30.9 billion.

Operating profit was 26 cents per share excluding one-time items. On that basis, analysts on average expected a loss of 12 cents per share, according to Thomson Reuters I/B/E/S.

The automaker's results were boosted by Ford Motor Credit Co, which reported that profits rose to $427 million in the third quarter from $95 million a year earlier.

From its automotive business, Ford reported a $446 million pretax operating profit worldwide, including positive results in all four of its regions.

Mulally said he was "cautiously optimistic" and some financial market indicators were returning to levels seen before the Lehman Brothers collapse in September 2008, but consumer confidence and high unemployment remain a drag on the U.S. and UK economies.
"We're just not sure about the strength of the recovery," Mulally said.

Ford posted losses totaling $30 billion from 2006 through 2008 and remains saddled with a much heavier debt load than GM or Chrysler following their bankruptcy reorganizations.

Ford and other automakers are fighting through a plunge in auto sales in North America due to the recession. The company left its 2010 U.S. auto industry sales forecast at 12.5 million vehicles, including medium and heavy trucks, but said it would give an updated outlook early next year.

Until a U.S. economic recovery takes off, cash will remain king for Ford, which borrowed more than $23 billion in late 2006 to finance its turnaround and believes it has enough money to complete its restructuring.

The automaker received $500 million of annual labor cost savings from concessions negotiated with the UAW in February, but said it needed more cuts to align long-term costs with those of GM and Chrysler.

Analysts said the relative health of Ford compared with GM and Chrysler was a key factor in the rejection.

"The positive quarterly results released by Ford this morning are further evidence of the contributions that Ford workers have made," UAW President Ron Gettelfinger said, announcing the rejection of the proposed concessions.

Ford and UAW leaders reached the agreement in mid October, but the vote among some 41,000 Ford UAW workers met stiff opposition over a "no-strike" clause on wages and benefits.

Ford's union workers in Canada ratified a cost-cutting deal over the weekend to preserve most of the Ford jobs in Canada.
Ford shares ended up 58 cents, or 8.3 percent, at $7.58 on the New York Stock Exchange.

Indian gold futures hit new high on IMF sale

MUMBAI (Reuters) - Indian gold futures climbed to a record high on Tuesday as world prices rose on news the International Monetary Fund had sold 200 tonnes of gold to the Reserve Bank of India (RBI).
The December contract on the Multi Commodity Exchange of India Ltd rose to 16,248 rupees ($345.7) per 10 grams, erasing the previous high of 16,173 rupees on Monday.

Kishore Narne, vice president, commodities, at Anand Rathi Commodities in Mumbai, said the IMF sale would keep the sentiment bullish in the near future and could push gold to test its lifetime high of $1,070.4 struck on Oct. 14.

Gold rose half a percent in the spot market to $1,064.55 an ounce. The metal is up 21 percent this year, and will likely keep its record of not having a down year since 2000.

The IMF said on Monday it sold 200 tonnes of gold to the RBI for $6.8 billion, quietly executing half of a long-planned bullion sale that had threatened to slow gold's rally.

This was the first time since 2000 that the IMF sold gold to a central bank.

India, the world's biggest gold market, has imported less gold this year as prices repeatedly made new highs.

Imports by traders between January and Oct. 22 were 157.9 tonnes, down from 383 tonnes bought in the same period a year ago, data from the Bombay Bullion Association showed.

Health Insurance for your Parents

Health Insurance for your Parents

Looking for a health insurance policy for your parents? The perfect one? Here are some pointers when you search for that perfect health insurance policy for your parents.



Today's globalized world means that people can, and in many cases, have to wander far from home for better opportunities. Young people leave home to pursue their career aspirations. The dream to be big and reach the greatest heights means, for many, going to a bigger place on the map than their own home towns. As vital this migration is for the well-being of the individual as well as the economy as a whole, there is a vital point to be kept in mind.

In this race for career growth, too often we leave behind our parents who are now well past their first youth and in all fairness, expect the ease, serenity, and comfort that come from having done the right thing by their family. They are now alone, elderly and without their offspring's presence and support. And although financially you will more than provide for them, what about their health? What happens if there is a sudden health emergency? After all, they are getting on in years, and the body becomes easily susceptible to ailments and disease.

It becomes critical that you take a well-thought out health insurance plan for them. It will ensure that even though you aren't there, their medical needs are met without any strain on them, financially, physically, or emotionally.

Here are some pointers when you search for that perfect health insurance policy for your parents:

Term limits on health insurance policy: As your parents grow older it becomes difficult to get health insurance. When you are shopping for their health insurance, check with the insurers for the maximum entry age. That is, the maximum age at which the insurer will issue a new policy. All insurers have an upper age limit for issuing new health insurance policies. Insurers also have a limit on the renewal age i.e., after a certain age, insurers will not renew existing health insurance policies. This knowledge will help you decide the level of coverage you need to give your parents. It will also help you decide on an insurer - the insurer that gives the highest maximum age for renewal would be the obvious choice. Just one tip, though - be thorough in checking the health cover offered by the insurer; your parents should be covered comprehensively.

Pre-existing diseases cover and how long after continuous policy coverage do they kick in: Until very recently, insurance companies refused to cover diseases such as diabetes and hypertension. A recent ruling has changed all that - now insurance companies cannot deny cover to customers afflicted by such diseases/disorders. Instead, they can charge the customer a higher premium than normal. They also put a clause, where they state that expenses toward any existing diseases will be covered only after a set period, ranging from 6 months to 2 years, sometimes even more.
So when you are shopping for health insurance for your parents, and they are already afflicted by a disease or disorder, you need to find out how soon the coverage for these diseases kick in, when they are under continuous cover.

Cashless facility: This facility means that you don't have to pay anything to the hospital at the time of admission or discharge. The hospital authority directly gets your bills paid by the insurance company. A couple of things to be kept in mind here are that firstly, the hospital or the nursing home should be a part of the network of the insurance company. The details are provided at the time you purchase the policy. And secondly, you should inform the hospital authorities at the time of admission that your parent's (or parents') cover includes the cashless facility.

Pre-mandatory medicals: Pre-mandatory medicals are the medical tests the insurer will insist upon for customers above a certain age, usually 45. They cover the customer only if the results satisfy their specific conditions list. Before opting for a particular insurance company, ask if they insist on these medicals and if yes then what these tests are.

Cost of pre-mandatory medicals: You also need to find out if the cost of these pre-mandatory medicals is borne by the insurance company or by you. Many insurance companies bear the cost of these tests. There are some that reimburse the cost of the tests. And then there are some that just don't pay the cost of the medicals. The choice here is clear.

Emergencies are bound to be emotionally exhausting for your parents; there is no need to add on the additional financial burden on them.

Imagine this:

You get a phone call from your dad, who starts off by saying that your mother is not keeping especially well. And just at the moment when you are thinking about the worst that can happen, daddy reassures you saying that their health insurance - that you provided for them - covers them adequately. And that everything is being taken care of without any glitches. Would it be fair to say that, along with a huge feeling of relief, you would feel genuinely proud of the fact that you have done your best in ensuring the best for your parents?

Andre Agassi admits using crystal meth and failing a drug test in upcoming autobiography

Agassi admits using crystal meth in autobiography


NEW YORK — Andre Agassi’s upcoming autobiography contains an admission that he used crystal meth in 1997 and lied to tennis authorities when he failed a drug test — a result that was thrown out after he said he “unwittingly” took the substance.

According to an excerpt of the autobiography posted on The Times of London Web site Tuesday, the eight-time Grand Slam champion writes that he sent a letter to the ATP tour to explain the positive test, saying he accidentally drank from a soda spiked with meth by his assistant “Slim.”

“Then I come to the central lie of the letter,” Agassi writes. “I say that recently I drank accidentally from one of Slim’s spiked sodas, unwittingly ingesting his drugs. I ask for understanding and leniency and hastily sign it: Sincerely.

“I feel ashamed, of course. I promise myself that this lie is the end of it. The ATP reviewed the case — and threw it out.”

The ATP did not immediately respond to a request for comment.

Agassi retired in 2006. Excerpts from his autobiography, which comes out Nov. 9, are being published this week in the London newspaper, as well as Sports Illustrated and People magazines.

In a story posted on People magazine’s Web site Tuesday, Agassi says: “I can’t speak to addiction, but a lot of people would say that if you’re using anything as an escape, you have a problem.”

According to the Times of London Web site, Agassi writes in his book that “Slim” was the person who introduced him to crystal meth, dumping a small pile of powder on the coffee table.

“I snort some. I ease back on the couch and consider the Rubicon I’ve just crossed,” Agassi writes.

“There is a moment of regret, followed by vast sadness. Then comes a tidal wave of euphoria that sweeps away every negative thought in my head. I’ve never felt so alive, so hopeful — and I’ve never felt such energy.”

“I’m seized by a desperate desire to clean. I go tearing around my house, cleaning it from top to bottom. I dust the furniture. I scour the tub. I make the beds.”

Among the most successful — and, without a doubt, one of the most popular — tennis players in history, Agassi drew attention not just for his play, but also for his outfits, his hairstyles and his relationships with women, including a failed marriage to actress Brooke Shields.

Agassi’s first major championship came at Wimbledon in 1992, and he won a gold medal at the 1996 Atlanta Olympics. But by late 1997, he dropped to No. 141 in the rankings, and he was playing in tennis’ equivalent of the minor leagues.

He resuscitated his career in 1998, making the biggest one-year jump into the top 10 in the history of the ATP rankings. The next season, he won the French Open to complete a career Grand Slam, then added a second career U.S. Open title en route to finishing 1999 at No. 1.

In a posting on People’s Web site, Agassi says he “was worried for a moment, but not for long,” about how fans would react if they found out he used drugs.

“I wore my heart on my sleeve and my emotions were always written on my face. I was actually excited about telling the world the whole story,” Agassi says.

A writer from SI first revealed the crystal meth reference on a Twitter posting Tuesday.

According to the Times of London excerpt, Agassi was walking through New York’s LaGuardia airport when he got the call that he had failed a drug test.

“There is doom in his voice, as if he’s going to tell me I’m dying,” Agassi writes. “And that’s exactly what he tells me.”

“He reminds me that tennis has three classes of drug violation,” Agassi writes. “Performance-enhancing drugs … would constitute a Class 1, he says, which would carry a suspension of two years. However, he adds, crystal meth would seem to be a clear case of Class 2. Recreational drugs.” That would mean a three-month suspension.

“My name, my career, everything is now on the line. Whatever I’ve achieved, whatever I’ve worked for, might soon mean nothing. Days later I sit in a hard-backed chair, a legal pad in my lap, and write a letter to the ATP. It’s filled with lies interwoven with bits of truth.”

In 2007, Martina Hingis tested positive for cocaine after a third-round exit at Wimbledon. She denied using the drug but was banned for two years. In July, Frenchman Richard Gasquet was cleared to resume playing after a 2½-month ban upon persuading the International Tennis Federation’s tribunal panel that he inadvertently took cocaine by kissing a woman in a nightclub.

Indian rupee to drop to new 3-wk lows; stocks watched

MUMBAI, Oct 28 (Reuters) - The Indian rupee should drop to new three-week lows on Wednesday as lower regional stocks raise concerns of a drop in the domestic share market which could prompt foreign investors to withdraw some investments.
* The Morgan Stanley index of Asian stocks .MIAPJ0000PUS ex-Japan was down 1.5 percent while the Nifty India stock futures SINc1 traded in Singapore were 0.3 percent lower, both pointing to a lower opening to the local market.

* Most Asian currencies were lower compared to the dollar. For a snapshot see [EMRG/FRX]. Gains in the dollar versus major units was also expected to hurt the rupee.

* The dollar held gains against a basket of currencies on Wednesday while the yen rose as investors trimmed stretched pro-risk positions in higher yielding currencies as stocks fell on weaker than expected U.S. data.

* The partially convertible rupee INR=IN tracked domestic shares to end weaker at 46.88/90 per dollar on Tuesday from a previous close of 46.645/655.

* India's central bank laid the groundwork on Tuesday for a rise in interest rates by tightening credit to the commercial property sector, lifting its inflation forecast and warning of the threat of asset price bubbles. [ID:nDEL485971]

Google’s Android takes on Apple

The Apple iPhone, which has been setting the bar in touch-screen smartphones, could soon be overtaken by an army of Google-powered handsets.

Android-based phones – handsets that use the open source Google mobile operating system – are on the march as non-iPhone carriers look for a rival to Apple’s device.

Since its introduction a year ago on one device with one carrier, Android has come a long way. It is used on 12 handsets with 32 carriers in 26 countries.

They will be joined by HTC of Taiwan, Motorola and Samsung, which are rushing out models in the US before the end of the year as Sprint and Verizon Wireless join T-Mobile as Android supporters.

Verizon has launched an anti-iPhone advertising campaign, satirising the Apple handset and its exclusive carrier, AT&T, teasing viewers with the promise of its first Android phones in November.

“iDon’t have a real keyboard ... run simultaneous apps ... take 5-megapixel pictures ... allow open development ... have interchangeable batteries,” say the advertisements, ending with: “Everything iDon’t, Droid does.”

According to Eric Schmidt this month, “Android adoption is literally about to explode”.

The Google chief executive stepped down as an Apple director in August after Google’s phone and operating system ambitions became a competitive threat.

Android appeals as a viable alternative for mobile handset makers looking to break the dominance of Nokia, Research in Motion and Apple, which have two-thirds of the US market and an 80 per cent global share.

”If I’m a hardware manufacturer who needs to license a smartphone operating system, my choice is [open source] Linux, which doesn’t have much of a UI [user interface], Windows Mobile, which people don’t seem to like these days because the UI is kind of antiquated, or Android,” says Ken Dulaney, analyst with the Gartner research firm.

Gartner, the research group, sees Android eating into Nokia’s leading market share and featuring on 18 per cent of smartphones by 2012, up from 1.6 per cent in the first quarter of 2009. That would put it ahead of RIM on 13.9 per cent and Apple on 13.6 per cent.

Android will inevitably beat the iPhone, according to Ken Dulaney, a Gartner analyst, if only because it will feature on many more handset models. Apple has only the iPhone and does not license its operating system or technology.

Android handset makers are improving on the iPhone’s hardware, while a new version of the operating system and more than 10,000 applications developed for it are providing them with competitive software.

Smartphones account for only 14 per cent of the market today, but more than 500m are expected to be sold in 2012 when they are forecast to account for up to half the market for mobile phones.

Gold price 'set to double in four years'

Gold prices, which hit record highs last week, could nearly double again in the next four years, according to a report to be published tomorrow.

Analysts at Edison Investment Research have predicted that the price of gold price could hit $1,879 (£1,185) an ounce by 2013, driven by the aggressive monetary policy of central banks around the world and a chronic shortage of the precious metal.

Charles Gibson, a gold expert at Edison, argues in the report that the peak in the gold price has been delayed because the world was still facing deflationary forces. Previously Mr Gibson had expected gold to reach $1,567 an ounce "in the near term".

The report says: "We reiterate our belief that gold is in the second phase of its bull run and that it has the potential to spike higher." It adds: "We believe that it will take longer than anticipated for quantitative easing and loose monetary policy to express themselves in inflation statistics."

The gold price hit an all-time high on three consecutive days last week, but the rally lost steam on Friday as the dollar strengthened and as traders locked in gains.

The price of gold for immediate delivery closed up 90c at $1048.10 an ounce on Friday, after hitting a record high of $1,062.70.