Fiscal deficit reaches alarming high at 6.8 percent of GDP

Indian economy's fiscal deficit is projected to widen to an 18-year high of 6.8 per cent of GDP in the current fiscal as the government continues to provide stimulus to the economy, necessitating higher market borrowings at around Rs 4 lakh crore.

Also read -
Union Budget 2009-10 highlights

With states also allowed to borrow from markets even if their fiscal deficit increases to 4 per cent of their GDP against the current limit of 3.5 per cent, the combined fiscal deficit of India will easily touch the double-digit mark.

However, Finance Minister Pranab Mukherjee committed to return to fiscal consolidation part at the earliest, even as the 13th Finance Commission is seized of the issue of setting up new targets for fiscal deficit.

"I intend to... return to the FRBM target for fiscal deficit at the earliest and as soon as the negative effects of the global crisis on the Indian economy have been overcome," he said.

Analysts noted that fiscal deficit at 6.8 per cent is within the expectation and they will wait for the Finance Commission report likely in October to comment further.

Also read -
Union Budget 2009-10 highlights

Fiscal deficit is projected to widen against 5.5 per cent expected in the Interim Budget for 2009-10 and 6.2 per cent witnessed in 2008-09 as the Centre's expenditure expanded to an all-time high of over Rs 10 lakh crore and tax income taking a hit due to stimulus packages.

FBT and Commodity transaction tax abolished

Finally Bowing to the long standing demand of India Inc, finance minister Pranab Mukherjee has abolished the fringe benefit tax and commodity transaction tax. in union budget 2009 - 10 which he presented today in parliament (see budget highlights)

However, Minimum Allocation Tax (MAT) on book profits has been increased from 10 percent to 15 percent, but with a provision of carrying forward the tax credit on MAT to 10 years from the current seven years.

Union Finance budget 2009-10 highlights

Finance minister Pranab Mukherjee presented union finance budget for fiscal year 2009-10 and looks like BSE is not happy with the budget as it nosedived by over 850 pts, This year's budget is rather short of reforms, major highlights of the budget are as follows :

* Govt plans to bring back economy to high growth of 9%

* GDP growth dipped to 6.7% in FY'09

* FM to make pre-budget talks with state FMs annual affair

* Fiscal deficit up from 2.7% to 6.8% of GDP

* Return to fiscal prudence at the earliest

* 'Aam admi' is focus of all programmes and schemes.

* IT exemption limit raised; Rs 15,000 for Sr.citizens .

* Limit raised by Rs 10,000 for tax payers, including women

* 10% surcharge on personal income tax scrapped

* Fringe Benefit Tax abolished

* No change in corporate tax

* Defence gets Rs 1,41,703 cr, up 34%

* Total fiscal stimulus in 2008-09 amounts to Rs 1,86,000 cr

* IIFCL to evolve mechanism for increased funding of infra

* IIFCL to re-finance commercial bank loans up to 60 per cent in critical projects through PPP to tune of Rs 1,00,000 cr

* Allocations for highways being stepped up by 23 per cent

* Funds for housing, amenities for urban poor up Rs 3,973 cr

* Funds for JN Urban Renewal Mission up 87% to Rs 12,887 cr

* Assistance for storm-water drainage project up by Rs 300 cr

* Farm credit target up at Rs 3,25,000 cr from Rs 2,87,000 cr

* Interest rates incentive to farmers to repay loans on time

* Additional Rs 1,000 crore for accelerated irrigation scheme

* Export Credit Guarantee scheme extended till March 2010 * 2% interest subvention (IS) scheme extended till March 2010

* IS scheme to cover 7 job-oriented sectors, including textile, handicrafts and handlooms.

* Commodity Transaction Tax abolished

* New pension system trust exempted from STT; DDT

* Minimum Alternate Tax hiked to 15% from 10%

* Tax holiday on petro sector extended to natural gas

* 100% tax deduction on political donation

* Stimulus for print media for another six months

* Fertiliser subsidy to be nutrient-based, not price

* Expert Grp to form viable pricing for imported petro goods

* Banks and insurance firms to remain in public sector

* Rs 100 cr one-time grant to expand banks in unbanked areas

* Govt committed to provide Rs 100 a day as wages under NREGA

* Allocation of Rs 39,100 cr to be made for NREGA

* NREGA coverage increased to 4.74 crore households in FY'09

* Work National Food Security scheme has begun

* Allocation for Bharat Nirman being raised by 45 per cent

* Rs 2,000 cr rural housing fund under National Housing Bank

* Mission for female literacy with focus on minorities, SC/ST

* 50% of all rural women to be brought into SHG programmes

* Full interest subsidy for students in select institutions

* Five lakh students to benefit

* Modernisation of national exployment exchanges

* Action for social security to unorganised sector workers

* New pension benefits for 12 lakh jawans and JCOs from July

* One lakh dwelling units for paramilitary forces personnel

* Unique Identification Card to citizens in 12-18 months

* Provision of Rs 120 crore for UIC project

* Rs 2,113 crore allocated for IITs and new IITs

* Rs 3472 cr for Commonwealth Games from Rs 2112 cr

* Customs, excise and service tax base rates unchanged

* For Indira Awas Yojana, allocation increased 63%

* IT returns to be made simpler

* 8 missions being launched under Plan on climate change

* Allocation for market development assistance scheme up 148%

* Allocation for Rural Health Mission raised by Rs 257 cr above interim budget

* Rs 500 cr for rehabilitation of Sri Lankan Tamils

* Rs 1,000 cr for infrastructure in cyclone-hit area in WB

* Total expenditure crosses Rs 10 lakh cr for first time

* Share of direct taxes in revenue increased to 56% in FY'09

India's business in gulf shrinks by 20 percent

Indian companies with interest in the Gulf have witnessed their business in the region decline by 20 percent.

Also, direct and indirect subsidies to domestic companies there have made it more difficult for Indian businesses to offset their losses, FICCI said in a statement.

This may be due several Gulf states still lacked transparency in trade promotion policies. Bureaucratic hurdles and red tape were two other areas of concern for Indian businesses.

The United Arab Emirates (UAE), despite being hard hit by the slowdown, followed by Oman, is the most-preferred investment destination for Indian businesses, FICCI said.

India can export wheat but in limit - Govt

It may be called as a good news for both govt wheat exporters as well as private firms or may be not, because there will be no subsidy from government this time around, so the wheat exporters might be dissapointed by this as they can't lower the selling price of wheat when compared to US wheat. Indian wheat would cost more than $240 a tonne in Southeast Asia and the Middle East, or $20-$30 more than Black Sea and U.S. wheat.

The government has allowed the export of 900,000 tonnes of wheat by state-run firms and 650,000 tonnes of wheat products by private trade as monsoon rains revived after a dry spell.export of wheat products was viable but the government had to give details of how it would monitor exports.

Analysts said the move had been anticipated by the market as a panel of federal ministers decided early this year to allow exports of two million tonnes of wheat and wheat products.

Forex reserves rises by $932 million

Indian Foreign reserves rose $932 mn during the week ended June 26, partly on account of cross currency revaluation and also some mop up of inflows by the central bank. While the government has vacated their ways and means advances (WMA) with the central bank. So foreign institutional investor's are showing confidence in indian economy amidst economic crises.

According to the latest data released by the Reserve Bank of India in its weekly statistical supplement (WSS), total foreign exchange reserves including gold and special drawing rights (SDR - currency with the International Monetary Fund) rose $932 mn to touch $264.58 bn during the week ended June 26.

Almost the entire growth in reserves was on account of the rise in foreign currency assets, which went up $924 mn, while the reserves with the IMF rose $8 mn.

Railway Budget - 50 world class stations to be brought up

Railway Minister Mamata Banerjee today said that about 50 stations are to be developed into world class stations with international level facilities.

Banerjee said that these stations would be developed through innovative financing and in Public Private Partnership mode.

Some of these stations are: CST Mumbai, Pune, Nagpur, Howrah, Sealdah, Bhubaneswar, New Delhi, Lucknow, Varanasi, Amritsar, Kanpur, Guwahati, Jaipur, Chennai Central, Tiruvananthapuram Central, Secunderabad, Tirupati, Bangalore City, Baiyapanahali (Bangalore), Ahmedabad, Bhopal, Habibganj, Gaya Jn., Agra Cantt., Mathura Jn., Chandigarh, Kolkata, New Jalpaiguri, Majerhat, Mangalore, Porbandar, Anand Vihar, Brijwasan, Ajmer and Puri. Banerjee also announced the construction of Multi-Functional Complexes (MFCs) in station premises for providing rail users facilities like shopping, food stalls and restaurants.

The MFCs will also have book stalls, PCO/STD/ISD/Fax booths, medicine, budget hotels and underground parking.

She said that during this year, 50 such railway stations would be developed in places of pilgrimage, industry and tourist interest.

"The responsibility for development of Multi-functional Complexes would be entrusted to IRCON and Rail Land Development Authority (RLDA)," she added.

The 49 identified stations to be developed as MFCs are: Alipurduar, Allahabad, Anandpur Sahib, Banspani, Bikaner, Bilaspur, Cuttack, Darjeeling, Dehradun, Digha, Durg, Ernakulum, Gandhidham, Ganga Sagar, Ghatsila, Gwalior, Hajur Sahib, Hubli, Hyderabad, Indore, Jabalpur, Jammu Tawi, Jasidih, Jhansi, Jodhpur, Kanyakumari, Kathgodam, Katra, Khajuraho, Madurai, Manmad, Mysore, Nanded, Nasik, Palakkad, Parasnath, Raebareily, Raipur, Rajgir, Rameshwaram, Ranchi, Shirdi, Silchar, Tarapith, Tiruchirapalli, Udaipur, Ujjain, Vadodara and Visakhapatnam.

so we can expect some good railway stations in five years or more from now because generally such development work takes minimum five years.

Railway Budget - List of new trains to be started

Following is list of new trains and their routes with frequency as announced by railway minister Mamta Banerjee -

1. Vishakhapatnam – Secunderabad – Mumbai Superfast (Bi-weekly).

2. Sriganga Nagar – Delhi – Nanded Superfast (Weekly)

3. New Jalpaiguri – Sealdah Superfast (Tri-weekly)

4. Bangalore – Hubli – Solapur Superfast (Tri-weekly)

5. Howrah – Bangalore Superfast (weekly)

6. Pune – Daund-Solapur Superfast (Daily)

7. Ranchi-Howrah (3 days via Ghatshila-Kharagpur and 3 days via Asansol) Intercity (6 days a week)

8. Kamakhya-Puri Express (Weekly)

9. Jabalpur-Ambikapur Express (Tri-weekly)

10. Gandhidham-Howrah Superfast (Weekly)

11. Delhi-Sadulpur Express (Tri-weekly)

12. Ajmer-Bhopal Express (by intergration of 9655/56 Ajmer-Ratlam and 9303/04 Ratlam- Bhopal express trains) (Daily)

13. Bilaspur-Tirunelveli Jn. (Thiruvananthapuram) Superfast (Weekly)

14. Mumbai-Karwar Superfast (Tri-weekly)

15. Durg-Jaipur Express (Weekly)

16. Dibrugarh Town-Chandigarh Express (Weekly)

17. Delhi-Farakka Express (Bi-weekly)

18. Hazrat Nizmmudin-Bangalore Rajdhani Express (Tri-weekly) via Kacheguda

19. New Jalpaiguri-Delhi Express (Bi-weekly) via Barauni

20. Mumbai-Varanasi Superfast (Daily)

21. Mysore-Yesvantpur Express (Daily)

22. Koraput-Rourkela Express (Daily) via Rayagada

23. Agra-Ajmer Intercity Superfast (Daily)

24. Mumbai-Jodhpur-Bikaner Superfast (Bi-weekly)

25. Agra-Lucknow Junction Intercity (Daily)

26. Hapa-Tirunelveli Jn. Superfast (Bi-weekly) via Thiruananthapuram

27. Gwalior-Bhopal Intercity Express (5 days a week) via Guna

28. Kanyakumari-Rameshwaram Express (Tri-weekly) via Madurai

29. Howrah-Haridwar Superfast (5 days a week)

30. Varanasi-Jammu Tawi Superfast (Daily)

31. Gorakhpur-Mumbai Superfast (Daily)

32. New Delh-Guwahati Rajdhani Express (Weekly) via Muzaffarpur

33. Veraval-Mumbai Link

Service (Daily)

34. Ranchi-Patna Jan Shatabadi Express (Daily)

35. Jhansi-Chhindwara Express (Bi-weekly) via Bina-Bhopal

36. Mumbai-Jodhpur Express (Weekly)

37. Jamalpur-Gaya Passenger (Daily)

38. Jhajha-Patna MEMU (Daily)

39. Kanpur-New Delhi Shatabdi Express (6 days a week)

40. Bhopal-Lucknow-Pratapgarh Superfast (Weekly)

41. Lucknow-Rae Bareli-Bangalore Superfast (Weekly)

42. Shimoga-Bangalore Intercity Express (Daily)

43. Mdurai-Chennai Express (Bi-weekly)

44. Guwahati-New Cooch Behar Express Intercity (Daily)

45. Balurghat-New Jalpaiguri Express (Daily) via Kishanganj

46. Alipurduar-New Delhi Jalpaiguri Express Intercity (Daily) via Siliguri

47. Dharmanagar-Agartala Fast Passenger (Daily)

48. Rewari-Phulera Passenger (Daily) via Ringus

49. Shoranur-Nilambur Road Passenger (Daily)

50. Coimbator-Shoranur Passenger (Daily)

51. Mathura-Kasganj Passenger (Daily)

52. Farakka-Katwa-Azimganj-Nawadwip Dham Express (Daily)

53. Bangalore-Kochuveli Superfast (Weekly)

54. Kolkata-Rampurhat Express (Daily)

55. New Jalpaiguri-Digha Express (Weekly)

56. Purulia-Howrah Express (Bi-weekly)

57. Kolkata-Bikaner Express (Weekly) via Nagore

Inflation at -1.3% for week june 13 - june 20

India's wholesale price index fell 1.3 percent in the 12 months to June 20, compared with the previous week's annual decline of 1.14 percent, government data showed on Thursday.

The fall was marginally smaller than a median forecast of a 1.35 percent fall, according to a Reuters poll.

The annual inflation rate was 11.91 percent during the corresponding week of 2008.

The wholesale price index is more closely watched than the consumer price index, which is published monthly, because it covers a higher number of products and is released weekly.