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India is expected to face a wider coal shortage during the quarter ending September over expectations of higher power demand, an internal power ministry presentation seen by Reuters showed, worsening risks of widespread power outages.

The energy-hungry nation expects local coal supply to fall 42.5 million tonnes short of demand in the September quarter, 15% higher than previously projected, due to higher growth in power demand and lower output from some mines.

The grim forecast shows the extent of the fuel shortage in India, at a time when annual power demand is seen growing at the fastest rate in at least 38 years and global coal prices are trading at near-record levels due to a supply crunch resulting from the Russia-Ukraine crisis.

India has stepped up pressure on utilities to increase imports in recent days, warning of cuts to supply of domestically mined coal if power plants do not build up coal inventories through imports.

However, one of the slides in the presentation showed that most states had yet to award contracts to import coal and that Indian utilities would run out of coal by July if no coal was imported.

Only one state had awarded a contract to import coal as of end-April, a power ministry import status report reviewed by Reuters showed.

India expects domestic coal supply of 154.7 million tonnes, 42.5 million tonnes short of the projected requirement of 197.3 million tonnes in the September quarter, the presentation showed. It previously expected a shortage of 37 million tonnes.

The presentation was made on Friday in a virtual meeting in which the federal coal and power ministers were present, with top energy officials from the federal government and the states in attendance, according to two government officials familiar with the matter.

The federal coal and power ministries did not immediately respond to a request seeking comment. Details on the presentation have not been previously reported.

Coal inventories at power plants have declined by about 13% since April, which translates to eight days of coal requirement, the lowest level at this time of the year in at least nine years. The higher coal demand could also stifle efforts to build power plant inventories.

India now expects the demand for coal from utilities to be 784.6 million tonnes for the year ending March 2023, the presentation showed, 3.3% higher than projected earlier.

The projected annual coal shortage is now 49.3 million tonnes, nearly three times the 17.7 million tonnes projected earlier, the presentation showed.

India reconciled its coal demand projections after higher-than-expected power demand growth in April, when electricity use hit a record high due to soaring temperatures.

Many states on Friday called for the federal government-run Coal India to import coal in bulk and distribute it among the states, the officials said.

States cited high global prices and supply challenges to seek aggregated imports, the officials said, adding that the coal minister had told states the demand would be considered.

Higher imports could put further pressure on state-government-owned power distribution companies, which are already saddled with debt and owe billions of dollars to generators as they have historically absorbed higher input costs to keep tariffs steady.

Coal India did not immediately respond to a request seeking comment. The world's largest miner has not imported coal in the recent years.

Billionaire Sam Bankman-Fried, who’s also the firm’s co-founder, said on Friday that recent rounds of fundraising by FTX and its US entity -- totaling more than $2 billion -- could be used to bankroll the moves.

“FTX is a profitable company,” he said in an interview. “You can look at the amount that we’ve raised over the last year or two -- it’s a few billion dollars. That gives maybe a sense of where we are in terms of cash that was explicitly viewed from a potential acquisition angle.”

Bankman-Fried, 30, has emerged as one of the most recognizable people in crypto. FTX crashed into the mainstream with Super Bowl ads, naming rights to the Miami Heat’s home court, and its logo on Major League Baseball umpire uniforms. Most recently, FTX has been making waves in traditional financial circles with a plan that could cut out brokerages from clearing some derivatives.

FTX has no shortage of funds in its war chest for deal-making. In January, the exchange raised $400 million at a $32 billion valuation, bringing the total amount raised in the prior half a year to close to $2 billion. At the same time, its US entity separately raised $400 million.

India’s economy maintained its momentum in April as a wider reopening from the pandemic kept rising prices from depressing demand for the time being.

Activity in the services sector as well as factories gained last month, while the three-month weighted averages of monthly changes in indicators from exports to credit demand suggested enduring strength. That helped keep the needle on a dial measuring so-called ‘Animal Spirits’ steady at 5 for the 10th straight month.

Reserve Bank of India Governor Shaktikanta Das, who is due to lead a meeting of the policy panel next month, has signaled more tightening to keep inflation from denting household spending power.

Below are details of the dashboard. (For an alternative gauge of growth trends, follow Bloomberg Economics’ monthly GDP tracker -- a weighted index of 11 indicators.)

Business Activity

Purchasing managers’ surveys showed services sector activity in April grew at this year’s strongest pace, while manufacturing also showed expansion. That helped the S&P Global India Composite PMI expand at the fastest pace in five months to 57.6 -- far above the 50 threshold that separates growth from contraction.

The activity backed by stronger new orders was accompanied by a bump in output prices as producers started passing on high raw material costs to consumers. That’s a risk to headline inflation, which climbed to an eight-year high in April.

Exports grew at this year’s fastest pace, rising 30.7% in April from a year ago to $40.2 billion, although in value terms that was lower than the $42.2 billion seen a month prior. Imports also rose 31% to $60.3 billion as high commodities prices pushed up the bill for everything from crude to edible oils. That widened the trade deficit to $20.1 billion from $18.5 billion in March.

The automobile sector continued to be weighed down by a global supply crunch, with passenger vehicle sales falling 10% in April from a month ago. The auto industry sees rate increases dampening consumer sentiment.

Other indicators of consumer activity were encouraging though, with bank credit growing 11.1% toward the end of last month from 9.6% in end-March. Liquidity conditions continued to remain in surplus.

Factory output growth picked up, rising 1.9% in March from 1.5% in the previous month, aided by electricity and mining. The output growth of eight infrastructure industries slowed to 4.3% from 6% in February as coal and crude oil output fell from a year ago. Both the reports are published with a one-month lag.

India does not plan to curb rice exports as the world's biggest exporter of the staple has sufficient stocks and local rates are lower than state-set support prices, trade and government sources said.

India banned wheat exports on May 14, just days after New Delhi forecast record shipments of 10 million tonnes this year, as a heat wave hit output and sent domestic prices to record highs.

"We have more than sufficient stocks of rice and there is no concern at all in terms of either prices or availability for exports and domestic requirements," said a senior government official involved in the decision making.

"At this stage, there is no consideration at all to prohibit rice exports," said the source, who didn't wish to be named in line with official rules.

Rice exports from India, also the world's second biggest consumer of the grain, jumped to a record 21.2 million tonnes in the fiscal year to March 2022 from 17.8 million tonnes the previous year.

Rice prices are falling, even as exports rise, as India has massive stocks and local purchases by the Food Corporation of India (FCI) - the state stockpiler - are increasing, said B.V. Krishna Rao, president of the All India Rice Exporters Association.

Milled and rice paddy stocks at FCI totalled 66.22 million tonnes against a target of 13.58 million tonnes.

"There is no need to put any restriction on rice exports," Rao said. "Wheat output and prices were affected due to the war in Ukraine, but ... the Black Sea region is neither a major producer nor consumer of rice."

India's rice export prices extended losses this week to touch $350 to $354 a tonne, the lowest in more than five years.

In the crop year to June 2022, India's rice output jumped to a record 129.66 million tonnes from 121.1 million tonnes the previous year.

Higher output has forced FCI to buy more rice from domestic farmers, taking a record 80.4 million tonnes of rice paddy from growers so far this year against 77 million tonnes over the same period last year.

"FCI's procurement is going up, and that is an indication that there's no shortage, so there is no logic for any ban on rice exports," Rao said.

A public welfare budget dedicated to the overall development of Uttar Pradesh will be presented in the assembly on Thursday, Chief Minister Yogi Adityanath said. Before being tabled in the House, the budget was passed in a cabinet meeting chaired by the chief minister at his official residence here in the morning.

"A public welfare budget dedicated to the overall development of Uttar Pradesh will be presented in the House today. With inspiration from the respected prime minister, the double-engine government of the BJP is working relentlessly to make Uttar Pradesh the 'growth engine' of the country," Adityanath said in a tweet in Hindi.

State Finance Minister Suresh Kumar Khanna said the budget would be for the welfare of the people and according to the BJP's 'Sankalp Patra' (election manifesto).

US stock futures edged up on May 25 ahead of the much-awaited release of the minutes from the recent Federal Reserve meeting, which market observers will closely track for clues regarding the speed and extent of future interest hikes.

The Federal Reserve, in its meeting early in May, hinted at a more aggressive stance by hiking the cost of borrowing. Investors expect a series of 50-basis-point rate hikes over the next several months. One basis point is one-hundredth of a percentage point.

Ahead of the release, Wall Street futures inched up after the Nasdaq Composite had dropped 2.35 percent and the S&P 500 lost 0.8 percent on May 24.

The US dollar index, which measures the currency against six major rivals, rebounded 0.16 percent to 101.92, a level not seen since April 26.

Bullion dropped from near a fortnight-high, with the greenback rising from the lowest in almost a month's period.

During the May 4 meeting, the Fed raised its target for the overnight bank-to-bank lending rate by half a percentage point, to a range of 0.75-1 percent, and Chairman Jerome Powell suggested that similar-sized measures would be undertaken in June and July to tame the worst inflation in the 40 years.

Minutes are expected to highlight a consensus over the view that the Fed funds rate should be neutral by 2022-end. Atlanta Fed President Raphael Bostic has publicly said he supports an expeditious return of monetary policy to a more "neutral stance" to bring down inflation that is currently running at more than three times the Fed's 2 percent target.

Bostic also said on May 23 that he would like to pause further rate hikes at the Fed's September meeting to allow time to assess the impact of tighter policy on the economy and inflation. The publication of minutes from the Fed's May meeting could show how widely held that view is, and what other options are under consideration.

Commerce and Industry Minister Piyush Goyal on Tuesday met World Trade Organisation Director-General Ngozi Okonjo-Iweala and reiterated India's support for strengthening the multilateral trading system.

During the meeting on the sidelines of the World Economic Forum Annual Meeting 2022 here, Goyal said India is committed to the WTO's efforts to strengthen the multilateral trading system to ensure free and fair trade among member countries.

He also met Swiss State Secretary Marie-Gabrielle Ineichen-Fleisch and exchanged views on enhancing India-Switzerland trade ties.

"India is an attractive market for Swiss cutting-edge technology and expertise to achieve scale and serve the world," the minister tweeted later.

Among his various meetings, Goyal also met Queen Maxima of the Netherlands and held talks on ways to further strengthen and renew Indo-Dutch ties by expanding business and investment opportunities while also exploring prospects of joint cooperation between the two countries.

He also met UAE's Minister of State for Foreign Trade Thani bin Ahmed Al Zeyoudi and Indian Energy Alliance Executive Director Fatih Birol; Denmark's Minister for Industry, Business and Financial Affairs Simon Kollerup; and Bangladesh's Private Industry and Investment Adviser to PM Salman F Rahman.

Also Read:- Modi Govt @ 8| Two vexing defence problems the Narendra Modi government has dealt with

May 26 marks eight years since Narendra Modi became Prime Minister of India, and since 2014 a Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government has been in power at the Centre. Where defence and national security are concerned, the people of India have been told that this government is sufficiently alert and effective in protecting national interests and territory.

The government has proved particularly adept in wrapping itself around the flag and associating with the military. Unwittingly though while resolving some longstanding issues, other equally baffling problems have been created.

The government has delivered, for instance, on its ‘One Rank, One Pension’ promise — a nettlesome issue previous governments kicked down the road for want of financial resources. In the 2022 defence budget of Rs 5.25 lakh-crore, the Rs 1.19 lakh-crore pensions bill combined with the outgo on payroll expenses exceeds the spend on force modernisation and maintenance costs. Should this trend continue, India will soon be able to afford either an adequately sized force, or the weapons to equip it supported by minimal stocks of spares and ammo — not both.

It may be recalled that based on the projected economic growth rate, and assumption of annualised 10 percent increase the defence budget was expected to reach the 3 percent GDP level recommended by the 11th Finance Commission by 2004. In reality, the defence budget has stagnated at the 2-plus percent of GDP level, and budgetary increases have barely kept pace with inflation. The result: No buck, no bang! Still the armed services have managed somehow to contend with live, disputed, borders with China and Pakistan. How well? Don’t ask.

There is a simple two-pronged solution that has not so far occurred to the Government of India. First, to match the military manpower cuts, the strength of 400,000 ‘defence civilians’ employed by the Ministry of Defence (MOD) should be slashed by half. India needs DRDO scientists, engineers, and the like, but can do without the horde of peons, clerks, stenographers, and section officers clogging up the MOD and other government offices everywhere. Official business conducted through a safeguarded computer network will eliminate the hopeless files-system and the endless numbers of babus associated with it, and coffee/tea machines can replace peons, and improve the MOD’s dismal operating efficiency.

Second, the defence civilian pensions should be shifted to the Government of India administration pensions account, thereby, at a stroke, freeing up roughly 80 percent of the defence pensions bill monopolised by retired defence civilians. It is monies the armed services can utilise to sharpen their war-fighting capability.

Through these two steps the Prime Minister can be credited for, (1) modernising the Indian military, making it razor-sharp, without raising the defence allocation, (2) digitising and de-bureaucratising the MOD (as a test bed for upgrading the government’s conduct of business), and; (3) removing the demeaning caste-like hierarchy featuring low-grade workers.

The other major change in the defence sphere is the drive to make India self-reliant in armaments. Again, Modi had the right idea with his aatmnirbharta policy. Except, in the years since he mooted it, there has been more confusion and drift than genuine progress; a situation not improved by a series of updated defence procurement procedure documents issued by the MOD that regularly trip up Defence Minister Rajnath Singh and ministry officials as much as they do the military brass and public and private sector defence industrial companies.

No one is quite sure what aatmnirbharta means. Do foreign companies producing dated military products (F-16 fighter plane, say) fit the guidelines? But doesn’t that undercut the objective? To compound the confusion, Singh in the past year has released lists of military goods the armed services can no longer import, including major weapons systems such as helicopters, artillery guns, warships, and submarines. It is supposed to encourage in-country research, design, development and production of advanced weaponry, and support systems, save the country tens of billions of dollars in hard currency, seed a vibrant defence industrial ecosystem to meet the armed services’ equipment needs, to generate export revenues, and have a multiplier effect on the rest of the economy.

Singh’s negative lists, prima facie, suggest the government wants results fast, to obtain which it is prepared to throw all concerned parties into deep water, and hope they learn to swim. This, incidentally, is the correct approach to shock the armed services, the MOD, and defence public sector units, habituated to weapons systems screw-drivered from imported completely knocked down (CKD) and semi-knocked down (SKD) kits, out of their licensed manufacture comfort zone.

Denied the import option, the military will have to take ownership of indigenous weapons projects and, crucially, prepare to fight with Indian-designed armaments that may not initially meet the foreign weapons standard. It is an unavoidable stage in making aatmnirbharta work.

The Modi years to-date have seen a refreshingly bold departure from the past when the government seemed unwilling to deal with the two main tasks at hand, namely, the pensions issue that had the entire military community up in arms, and the more debilitating matter of reliance on foreign arms.

The solution for the first problem was enabled by the government’s readiness to sequester the necessary funds and take a financial hit, and for the second, was the decision to kickstart the Indian defence industrial economy by closing off the imports channel, and incentivising the public sector and private sector companies with promise of full order books. India may finally be on the way, hiccups apart, to consolidating its military power.

Bharat Karnad is Distinguished Fellow at the United Service Institution of India and Emeritus Professor at the Centre for Policy Research. Views are personal, and do not represent the stand of this publication.

As many as 853 foreign direct investment proposals have been disposed of through the foreign investment facilitation portal in the last five years, the commerce and industry ministry said on Tuesday.

The Foreign Investment Facilitation Portal (FIFP) was developed after the abolition of Foreign Investment Promotion Board (FIPB) in May 2017.

After the abolition of FIPB, granting of government approval for overseas investment under the FDI (Foreign Direct Investment) policy and FEMA (Foreign Exchange Management Act) regulations was entrusted to the concerned ministries/departments, the commerce ministry said in a statement.

The Department for Promotion of Industry and Internal Trade (DPIIT), under the ministry, was made the nodal department.

It said, "853 FDI proposals have been disposed of through FIFP since abolishment of FIPB.”