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The Mint Report for 11 January 2011

The Mint Report for 11 January 2011
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First Published: Tue, Jan 11 2011. 09 44 PM IST
Updated: Tue, Jan 11 2011. 09 44 PM IST
Prime Minister Manmohan Singh may reshuffle his cabinet this month in a move that may reveal how much support he is giving some reformist ministers. Several ministerial vacancies need to be filled, some of which came about as a result of the departure of ministers over graft accusations. The reshuffle could show the direction the government will take, either to back reformist ministers or bow to political expediency and industry pressures, in the run-up to important state elections this year. The Premier is facing the toughest time of his second term in office amid accelerating food inflation and corruption scandals.
The director general of hydrocarbons SK Srivastava announced that India plans to bid out shale gas blocks by the end of the current year. He said that India is working with the United States Geological Survey to help towards facilitating exploration of shale gas reserves. Around 32,500 trillion cubic feet of shale gas has been identified globally, with the US being the lead producer. Shale is fine grained sedimentary rock containing organic material, which when distilled can produce oil and gas.
Auto sales in India grew a record 31% in 2010, driven by booming demand, easier access to financing and a wider choice of models. But a likely hike in interest rates, and rising fuel and vehicles costs are expected to slow sales growth this year. Similarly China, where sales rose by a third in 2010, is also expected to slow down due to rising gas prices, the withdrawal of subsidies and new laws governing new car registrations.
Indian auto sales are expected to moderate in 2011, pegged at 12 to 15% by Fitch Ratings and other analysts. That growth rate is more in line with the U.S. auto market, which is the world’s second-largest and grew 11% in 2010, snapping a four-year decline.
The government grapples with high prices of essential commodities, Prime Minister Manmohan Singh held a meeting with senior ministers to find ways to tame food inflation which has crossed 18%. The meeting attended by by finance minister Pranab Mukherjee, home minister P. Chidambaram, food and agriculture minister Sharad Pawar and planning commission eputy chairman Montek Singh Ahluwalia remained inconclusive. Another round of discussion may be held on Wednesday. Food inflation rose to 18.32% for the week ended 25 December, due to rise in prices of food items like onion, milk and meat.
The benchmark index showed great resilience in the last minutes of trade to end flat. In early trading today, the markets bounced back after a selloff in the previous five sessions as short sellers covered their trades. However, this support didn’t last. The Sensex closed at 19,196 down just 27 points and the Nifty fell 8 points to settle at 5,754.
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First Published: Tue, Jan 11 2011. 09 44 PM IST