India mulls calling special parliament session on food bill


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NEW DELHI // India's government is considering calling a special session of parliament to pass a populist but hugely expensive bill to provide subsidised food to millions of people.

The landmark Food Security Bill, approved by cabinet in 2011, would provide subsidised rice, wheat and millet to more than 700 million Indians.

The bill is seen as a vote winner for the ruling Congress party ahead of elections due by next year, but critics say the measure will further strain the country's troubled finances.

The finance minister P Chidambaram said yeserday that the government would meet members of the opposition shortly to see "whether they will cooperate in passing the bill in a special session of parliament".

"If that support is forthcoming, the bill will be passed in a special session of parliament based upon the response of the main opposition parties," he told reporters after a cabinet meeting.

"We would like to pass the bill as early as possible."

Opposition parties have attacked the Congress-led government for attempting to push the bill, saying there had not been enough discussion of its impact on farmers and consumers.

Rajnath Singh, head of the main opposition Bharatiya Janata Party, said it would be "undemocratic" if the government tried to push the bill through without a parliamentary debate.

"We definitely would like the Food Security Bill to be passed in the upcoming monsoon session of the parliament with some amendments," he told reporters.

The measure, which government officials have said would increase the annual subsidy bill by 1.1 trillion rupees (Dh70bn), is considered key to the Congress-led coalition's fortunes ahead of elections.

Food prices have soared over the past seven years, causing increased hardship for the 455 million Indians estimated by the World Bank to live below the poverty line.

Critics of the bill say India can ill afford such a costly subsidy at a time of slowing economic growth, galloping inflation and a yawning budget deficit.

The bill will target 75 per cent of the rural population and up to 50 per cent of the urban population, providing a monthly supply of between three kilos and seven kilos of grain per person, depending on need and priorities.

Existing food-subsidy programmes in India have been marked by rampant corruption and inefficiency, with little of the grain actually reaching its intended recipients and much of it sold on the black market or left to rot in warehouses.

UAE currency: the story behind the money in your pockets

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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