Indian economy account deficit becomes thinner at 1.3 percent

Here is good news for all the indian,s - India's current account deficit this fiscal is likely to narrow down to 1.3 per cent of GDP as the trade gap shrinks and FDI inflows pick up on the back of positive election mandate.

In 2008-09, the current account deficit was 2.6 per cent of the country's gross domestic product (GDP) at $29.8 billion, against $17 billion a year ago.

Goldman Sachs said the deficit is lower than their expectation of 3.5 per cent, mainly due to rapid fall in imports in the January-March quarter of 2008-09.

The firm also said that domestic demand and its expectations of the output gap closing rapidly, are likely to support a strengthening rupee.

India's external debt at $ 230 billion

India's external debt rose 2.4 per cent or $5.3 billion to $229.9 billion for the fiscal ended March 31, the Reserve Bank of India (RBI) said on Tuesday.

India, which has an external debt equivalent to 22 per cent of its gross domestic product, was already the fifth most indebted country in the world in 2007, the central bank said in a statement.
The current account - which includes components like external trade deficit and remittances from overseas - had a deficit of $29.82 billion for last fiscal, compared to a deficit of $17.03 billion in the previous period.

The capital account - which comprises items like foreign investment, external loans and foreign assistance - had a surplus of $9.15 billion for 2008-09 compared to a surplus of $107.94 billion in the year-ago period.

Goods & Service tax can fill govt pockets by $15 billion

India could gain $15 billion a year by implementing the Goods and Service Tax (GST) as it would boost exports, raise employment and spur growth, the head of a government panel said on Monday.

Finance Minister Pranab Mukherjee is expected to lay a roadmap for the launch of the ambitious tax reform in his budget speech next Monday. It is expected to be implemented across the country from April, 2010.

The new tax system, which will replace all major central and state taxes, is expected to lower tax rates by broadening the tax base and minimise exemptions, Vijay Kelkar, Chairman, of the 13th Finance Commission said.

Kelkar said implementation of GST had raised Canada's GDP by 1.4 per cent and would help India redistribute the tax burden equitably between manufacturing and services.

"In India we can expect a similar kind of positive impact. This means gains of about $15 billion annually," he was quoted as saying in speech, a copy of which was made available by the finance ministry.

The panel, which has been set up to determine the devolution of federal taxes to states for five years, is expected to submit its report soon.

Referring to opposition to GST by some state governments, Kelkar said the panel could provide a compensation package to states and help speed up the implementation of a "flawless" GST.

Deflation is not a threat for India

India is not threatened by a deflation spiral that could derail economic development, the economic intelligence arm of global rating agency Moody's said today.

"Deflation is generally unwelcome by policymakers as it encourages consumers to delay purchases and businesses to postpone investment, which would eventually hurt GDP growth," Sherman Chan, an economist with Moody's Economy.com said.

"Lower prices may in fact boost consumption volumes, especially in poor regions. Meanwhile, cheaper input costs may also present a good opportunity to speed up construction of much needed infrastructure," Chan addded.

For the first time since the new wholesale price index (WPI) series started in 1995, India's annual rate of inflation has turned negative, falling to minus 1.61 percent for the week ended June 6. This has led to fears that this would lead to hoarding of food articles and a consequent rise in prices.

The inflation rate, which was 0.13 percent in the previous week, had last turned negative in 1977.

Where does Indian Metro's stand in reality NOWHERE !!

Just came for surfing on net after a day long tedious job... really software job is too blood sucking.... net surfing act as a Rejuvenation factor for me saw a link showing top 25 cities to live in.. looks kind of weird as a person living in a remote place but doesnot require anything from rest of world is by far the luckiest person and that place is the best place to live in.

We'll saw the list for some top 20 spots and then closed the link as couldn't find a single indian metro city in whole list forget about tier two cities of the country felt bad as lot of homework still needs to be done if we want any of our metro cities in the prestigious list (i am giving priority to Metro's as the tier 2 cities will follow), The infrastructure however still lies pathetic but after analyzing the last 5 years i can say that a lot of good has happened and next 20 years or so may be bangalore or New Delhi will figure in the list i am not very sure about the other metro's like mumbai and kolkata, The list of top 25 best places to live was majorly covering the european cities but may be 20 years from now we might see some of indian cities name in the list if not many. so i thought to show the list to the readers here it is :

1 - ZURICH

2 - COPENHAGEN

3 - TOKYO

4 - MUNICH

5 - HELSINKI

6 - STOCKHOLM

7 - VIENNA

8 - PARIS

9 - MELBOURNE

10 - BERLIN

11 - HONOLULU

12 - MADRID

13 - SYDNEY

14 - VANCOUVER

15 - BARCELONA

16 - FUKUOKA

17 - OSLO

18 - SINGAPORE

19 - MONTREAL

20 - AUCKLAND

23 - AMSTERDAM

24 - GENEVA

25 - LISBON

India's April fiscal deficit at $11 billion

India's fiscal deficit in April was at 541.58 billion rupees ($11 billion), or 16.3 percent of the full-year target, the government said in a statement on Tuesday. Tax receipts were at 74.62 billion rupees while expenditure were at 662.17 billion rupees for the first month of 2009/10 fiscal year.

India's GDP may average 7.2 pc over next 5 yrs

India's real GDP growth will average at 7.2 per cent over the next five years even as risks to the global economy continue to remain high, the Economist Intelligence Unit (EIU) has said.



The world's second-fastest growing economy may also see negative inflation for the next 3-6 months triggering expectation of rate cuts by banks, the research arm of London-based Economist added.

"Emerging Asia will be the world's fastest-growing region over the next five years (2010-13), but this mainly reflects a relatively strong growth performance by India and China. The EIU expects India's real GDP growth to average 7.2 per cent over the next five years," it said.

Global share prices have been boosted on expectations that the worst of the global economic meltdown is over, however, a sustainable recovery is distant, it maintained.

There may be more green shoots of recovery in the global economy as fiscal and monetary stimulus packages start to have an impact, but "growth over the next two years will be marked by a high degree of volatility", Vohra said. There will be a substantial slowdown in quarter-on- quarter growth rates once the stimulus fades, he added.

courtesy economictimes

Indian Economy is resistant to ongoing recession

Economic recession has effected almost all of the major economies of the world whether developed or developing, economies which don't have strong fundamentals are effected the most like the US economy(which happens to be the largest economy of the world presently). So what has made indian economy safer even in these tough times?

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According to me it's the government's hold on the economy in place and the good thing about indian government is that it takes a very conservative approach because it keeps people's interest on high priority and consider the ill effects of one economic decision rather then talking about the corresponding positives this has acted as a firewall from the ongoing economic crises which is biggest after the 1929 great depression which i read in my history book in tenth grade.

It may be noted that still in india government has a very strong hold on the economic activities ( a lot of restrictions were removed in the 90's when Manmohan singh was Finance minister under PV Narsimha Rao government) had it been still like early 90's indian economy would have been completly shielded from the crises but an economy can rise only if it takes off some of restrictions and let the business congloramates go beyond the physical boundaries and compete globally as majority of indian companies are currently doing that's very good according to me.

If Indian government had lifted all of the retrictions in 90's no doubt our economy would have been much bigger today but would have been as affected as USA presently with pink slips all around and companies following hire and fire policies huh...thank god Manmohan Singh was there to think about it at that time...really SINGH is KING!!

The point described above by me is made clear by following figures that in the month of May itself we had $2 billion of FII money into our country, this is because of the stability and strength of the Indian economy, which is reassuring to the Indian investor.

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ok now i am logging off will keep you guys updated in next post coming soon

- Himanshu Sharma

Govt may remove FBT & Service tax on exporters

Removal of Fringe Benefit Tax(FBT) and service tax exemption for exporters in the Budget are under active consideration of the Finance Ministry, a highly placed official said.

Commerce Secretary Rahul Khullar today met Finance Secretary Ashok Chawla and is believed to have pressed for several fiscal incentives for exporters, who are suffering due to the ongoing recession in major markets.

India's exports have been contracting for the last seven months in a row, costing millions of jobs in labour oriented sectors like gems and jewellery and textiles, industry estimates suggest. In 2008-09, exports grew by a meager 3.4 per cent to USD 168.7 billion.

Khullar met Chawla a day after he had a meeting with a delegation of the Federation of Indian Export Organisations.

The exporters have been demanding removal of the FBT on the ground that the business promotion expenses should not be treated as fringe benefits and should not be taxed.

The other major demands, including outright removal of service tax on exporters, is also under consideration of the government, the official said.

At present exporters get reimbursement for the service tax but it involves several procedural hassles. They want total removal of this tax.

courtesy - economictimes

PM says Indian economy faced crises very well

Returning home after attending the summits of Shanghai Cooperation Organisation (SCO) and Brazil-Russia-India-China (BRIC), where the global financial crisis was the main theme, Singh said there was a need for reforming the present systems of global governance and international financial system.

He hoped the BRIC would not remain a "talk-shop" and the member countries would work together so that their voice is heard in the global arena.

"We live in times of rapid economic changes when the BRIC economies are a factor of stability and growth," Singh told accompanying journalists while returning from Yekaterinburg in Russia.

"India has borne the global economic crisis well, though we have not been unaffected," he said.

Talking about the BRIC Summit, he said the leaders discussed the need to intensify cooperation among the four nations and international economic downturn and how to prepare for the forthcoming G-8 and G-20 Summits.

INR falls 39 paise against US $

Indian rupee closed above the crucial 48 level against the dollar for the first time in five weeks in tandem with a sharp slide in local stocks, raising fears of capital outflow from equity.

Resuming lower at 47.84/85 a dollar, the domestic unit later moved in a range of 48.16 and 47.81 before ending the day at 48.13/14 against the dollar, cheaper by 39 paise from its last close of 47.74/75 a dollar.

Dealers at the Interbank Foreign Exchange (forex) market said continued capital outflows in the week weighed on rupee sentiment.

Foreign institutional investors pulled out nearly USD 193.60 million in the last two days. They were believed to be heavy sellers in equity today.

The Indian benchmark Sensex plunged by 435 points or 2.91 per cent following dramatic sell-off by foreign funds.

Meanwhile, the dollar, which was buoyant in the overseas market in the last few days, was little changed against the basket of currencies.

BRIC's maiden summit to discuss about economic crises

Leaders of Russia, China, India and Brazil will discuss the reform of international financial institutions at their debut summit on Tuesday in the Russian city of Yekaterinburg.

It said in a statement that the four countries, known by the BRIC acronym, would discuss "prospects for dialogue between the Group of Eight and traditional partners" on reform ahead of the G8 summit in Italy in early July.

BRIC countries want to increase their representation in the IMF, where the majority of quotas are currently controlled by developed nations. They are aiming for an agreement on IMF reforms by January 2011. Russia currently has 2.7 per cent of IMF votes, and is unlikely to see its quota increased even under a proposed reform. China holds 3.7 per cent, Brazil 1.4 per cent and India 1.9 per cent.

BRIC states are trying to strengthen their clout as the producers of 15 per cent of global gross domestic product by building up the grouping into a powerful world player. The Kremlin said the four will issue a communique after the summit.
The four are also among the world's seven biggest holders of international reserves. They have expressed worries about the economic stimulus programs in developed nations, fearing they may threaten their savings by driving up future inflation.
Kremlin foreign policy adviser Sergei Prikhodko said on Sunday that BRIC countries were unlikely to discuss a new reserve currency but the reform of the IMF is closely linked to the currency discussion.
China said it is willing to contribute up to $50 billion to the IMF through a purchase of IMF bonds, non-tradable securities which will likely be denominated in the IMF's Special Drawing Rights (SDRs).
Brazil and Russia said they will buy $10 billion each. The debt issue will boost the role of SDRs in international finance.
The statement said the four will also discuss a response to the economic crisis and exchange views on international policy issues, including regional crises, the fight against terrorism, energy and food security.
BRIC will also discuss further steps aimed at "strengthening collective and legal foundations in global policy." The Kremlin said the communique will "reflect common vision of the current stage of global development."

courtesy economictimes

Plan outlay may swell by Rs 1,00,000 cr in Budget

Plan expenditure may see a quantum jump of about Rs one lakh crore due to likely increased allocation for the UPA's flagship programmes such as NREGA, Bharat Nirman as well as concessional foodgrains to the poor.

This is likely to take total Plan expenditure to Rs 3.85 lakh crore against Rs 2.85 lakh crore in the interim Budget, tabled in February, sources told media.



Higher Plan expenditure may cause increase in the fiscal deficit for 2009-10 to over six per cent of gross domestic product (GDP) from 5.5 per cent projected in the interim budget.

President Pratibha Patil in her address to the joint sitting of Parliament had expressed the government's commitment to flagship schemes including the NREGA and Bharat Nirman, besides food security, among other programmes.

"Ministries have sought more allocation to implement flagship schemes, including social sector programmes and new schemes. This may result in the Plan expenditure pegged at 2.85 lakh crore during the interim budget to swell by about Rs one lakh crore," a source said.

Ministries seeking higher allocation in view of the government's commitment for flagship schemes and strengthening infrastructure include rural development, railways, power, urban development, water resources and human resource development among others, the sources said.

Sector-wise plan allocation for education may go up over Rs 15,000 crore, rural development Rs 4,000 crore, urban development about Rs 4,000 crore, power Rs 8,000 crore and health Rs 4,000 crore.

Indian Union Finance budget on July 3rd

Finance Minister Pranab Mukherjee is expected to present the 2009/10 budget on July 3, an official said today.

"Parliament's budget session is proposed from June 29 to August 7 and the budget could be presented on July 3," an official in the Parliamentary Affairs Ministry, who did not wish to be named, told reporters.



He said the Economic Survey, an annual report on the state of economy, was likely to be presented on July 2 and the railways' budget on July 1.

The proposed dates need to cleared by the Cabinet and notified by the President's office, he said.

The government presented an interim budget for the 2009/10 (April/March) year in February ahead of national elections in April and May.


courtsy economictimes

UPA government's Agenda

UPA government has been elected to power for second time in a row and it has huge hurdles to overcome on the path of development of the nation which are clearly top priority of this goverment here are few important issues in UPA government Agenda.

1. Major shift in governance practices :

one, ongoing, independent evaluation and public reporting of progress in implementing government schemes; two, big strides in e-governance; three, decentralisation and empowerment of panchayats and non-government organisations to implement and monitor government schemes; four, breaking barriers between departments and schemes to achieve synergy, integration and better utilisation of existing resources;

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five, innovative regulation of health, education and provision of public services; six, liberal use of technology in welfare transfers and achieving public awareness; and, seven, institutionalisation of the government’s basic commitments by requiring all Cabinet notes to specify how their proposals would enhance the goals of equity or inclusion, innovation and public accountability.

2. Disinvestment, FDI lead reforms roadmap:

The government will push ahead with economic reforms, pursue disinvestment, encourage FDI and increase public spending without giving up fiscal prudence. It will also provide tailor-made booster packages for specific sectors to pull the economy out of the slow lane of growth. “Our immediate priority must be to focus on management of the economy that will counter the effect of the global slowdown by a combination of sectoral and macro-level policies. This must be accompanied by measures to achieve a counter-cyclical expansion in public investment in infrastructure sectors,” President Pratibha Patil said.

Disinvestment of up to 49% in state-run companies will be key to removing those funding constraints. The government will ride piggyback on IPOs by PSUs to offload its shares to public.

3. Zero tolerance for terror :

The second Administrative Reforms Commission (ARC) had earlier recommended UIC for checking illegal immigration and terrorist infiltration. In fact, a pilot project for a Multi-purpose National Identity Card (MNIC) has already been implemented in 13 districts.

“The scheme will be implemented in three years, overseen by an Empowered Group. This will serve the purpose of identification for development programmes and security,” Patil said. According to the ARC, the card is imperative also for delivery of services to citizens. Patil said the government had already prepared a detailed plan to address internal security challenges which would be implemented in a time-bound manner.

4. Food security act :

The government committed itself to coming true on its ‘aam aadmi’ poll agenda with the President promising a national food security Act backed by a new BPL survey which could alter the ambit of those under food schemes.

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While the UPA government has been at work to revamp the method of identifying below poverty line beneficiaries for various social sector programmes, its move to provide 25 kilogrammes of rice or wheat at Rs 3 per kg could heighten the need to redo the list systematically.

5. One rank-one pension report :

After tying itself in knots over the long-standing demand for one rank-one pension (OROP) for armed forces during the run-up to the general elections, the UPA government has promised to resolve the contentious matter by this month-end. President Pratibha Patil said the committee headed by cabinet secretary K M Chandrasekhar had ‘‘already commenced its work and expects to complete it by the end of June 2009’’.

The UPA government, however, is promising only a partial implementation of OROP at best, with the defence ministry acknowledging that full implementation is simply not feasible ‘‘administratively’’.

6. Home stretch for urban poor :

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The government plans to take a slew of measures to uplift the living conditions of the poor in fast-expanding cities. A major thrust on affordable housing is on the cards, President Pratibha Devisingh Patil said. She said the government will propose Rajiv Awas Yojana for slum dwellers and the urban poor on the lines of Indira Awas Yojana for the rural poor.

Over 15-lakh homes are being made for the urban poor. Meanwhile, the housing ministry has asked developers to list the sops they expect from the government for building low-cost houses. The ministry is keen on reviving tax benefits for real estate developers who construct houses for the economically-weaker sections (EWS). The scheme was discontinued last year.

7. Realistic power generation goals :

The government has pared the target for increasing power generation to make it more achievable but that may put paid to its poll promise of making electricity available to all Indians by 2012. By the end of the Eleventh Five Year Plan (2007-12), the government plans to add 52,000 MW new capacity, a 34% drop from the original target of 78,600 MW.

“The effort would be to see that at least 13,000 MW of generating capacity is added each year through a mix of sources—coal, hydel, nuclear and renewables,” President Pratibha Patil said. Total capacity addition in the first two years of the 11th Plan was 12,700 MW, virtually half of the targeted 23,100 MW. The government’s performance was dismal in 2008-09, when a mere 3,500 MW was added, 68% less than the target of 11,061 MW.

8. Women’s quota bill :

Government would hold consultations with all political parties to get around the resistance from the OBC outfits which have held up implementation of the landmark measure insisting on a separate quota for OBCs and Muslims within the larger women’s quota.

9. Right to education law on anvil :

Along with the formulation of a “brain gain” policy, work on the National Council for Higher Education will be initiated in the first 100 days. Other areas of concerted action include enactment of the Right to Free and Compulsory Education Bill, setting up of a National Female Literacy Mission, strengthening of the scholarship and education loan provisions.

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The focus is on higher education. The efforts will not be limited to mere expansion, but reform in the regulatory framework. There is a proposal to attract talent from across the globe — the “brain gain” policy will find expression through 14 new universities that are being set up over the Eleventh Plan period.