Inflation down by 0.2%

Moderating global crude oil prices over the past few weeks worked behind 12.4 per cent inflation for the week ended August 16.Following dip in prices of vegetables, meat and cement, it is 0.2 per cent less than that in the previous week. Finmin considered inflation figure an early sign of moderation in prices.

It went on to reaffirm the fact that prices of most items in the WPI basket have either declined or remain unchanged and the annual rate of inflation in two of the three major commodity groups showed signs of moderation

Bse Closing rates

India may save $17 bn on oil fall

India is expected to save about USD 17 billion this fiscal on crude oil import bill due to fall in crude oil prices, currently hovering between USD 110-120 per barrel after nearly touching USD 150 per barrel mark, a study said. According to the industry body Assocham's Eco Pulse study on 'Crude Economics', the oil import bill for the current fiscal would have soared to USD 125 billion had crude oil prices remained at USD 145 per barrel level.

However, with the reversal in price movement, the import bill for crude oil would be restrained to USD 108 billion, it said.
Although, experts are still not sure whether the crude price decline would sustain in coming months, but so far it has shed almost 25 per cent after peaking to an all time high of USD 147.27 per barrel in July this year.

The study noted that oil prices have nosedived mainly on account of correction in demand, easing supply conditions and stronger US dollar.
The demand in the US, the biggest oil consumer has fallen sharply from 20.7 million barrels per day (mbpd) in 2007 to 19.88 mbpd in the first quarter of 2008, the chamber said.

In April-June this year, India's oil import bill stood at 25.5 billion dollars against 17 billion dollars during the corresponding period last year.
Fall in oil import bill will also help the government to bridge the trade deficit which rose to 30.4 billion dollars in the first three months of this fiscal.

The OECD-European countries have also registered a slowdown in demand from 15.28 mbpd in 2007 to 15.24 mbpd in the first quarter of this year.
Softening crude oil prices may come as a respite to the burgeoning current account deficit growing at an alarming rate mainly due to the rising crude oil bill.

Trade deficit for the first quarter of the fiscal (April-June 2008) widened 42 per cent on account of a 50.2 per cent rise in the oil imports. The oil import bill for Q1 08 stood at a whopping USD 25.5 billion on top of USD 17 billion in the same quarter last fiscal.

The economic forces at play in shrinking demand and improving supply facilities may cool down crude oil prices further which would lead to a narrower than estimated current account deficit, Assocham President Sajjan Jindal said.
Strengthening dollar has also played its role in cooling down the crude prices. The greenback has appreciated by as much as 6 per cent versus Euro in the last three months.

-economic times

Character of Left parties - Ridiculous -On Indo-US Deal

Left Parties (CPM and associates) are playing a spoilsport in Indo - US Nuclear Deal. Which will benefit India's Power crises and can bring an end to power crises for whole country.
but Left parties are against indian interests and so they withdrew their support to UPA government as they are against Indo- US deals.

Actually Left parties are funny parties who don't know how to work for interests of the country. by seeing past of all the Comminists parties it is clear that they are always against any deal with United States of America and India, whatso ever be the motive of the deal.

I mean to say if there is a deal to take place between Indian Government and USA then Left parties would always be against them. Instead if the same type of deal is taking place between India and any other country(China or UK especially)then Left parties would have never opposed that deal under any circumstance.

In previous general elections Left parties provided support to Congress government to stop BJP from making a government at center and in 2008 they withdrew support from UPA government to stop them to finalize the INDO - US Nuclear Deal, they have no moral values and are surely not thinking in the interest of indian Subcontinent. If they have understood each and every aspect of this deal then there is no reason to act against this deal which would end Power crises in india and would enter India's name along with likes of US, UK, Russia, China etc which are developed Countries. So here the question arises

Are Left parties against Development of India as a country????

Looking at present scenario of indian politics and biased opinion of left parties on Indo US Nuclear deal the answer to above question is YES.

Left Parties have some bias on deals with Russia or UK instead of USA so they are opposing the deal without thinking about the results and the hindrance which failure of the deal would provide in growth of India as superpower which is a dream of Sardar Manmohan Singh.

What is Wealth Tax - Explained

Everyone having interest in Indian economy is fascinated by 'Wealth Tax' what it actually is??
so this post will sort every Ambiguity on this topic of wealth tax??

What is wealth tax?

Wealth tax is a tax levied on individuals, Hindu Undivided Families (HUFs) and companies who possess net wealth in excess of INR 1.5 million on March 31st of every year. The Wealth tax law specifies a list of assets that will be considered to be part of the taxable wealth of the assessee. Broadly, house property, motor cars, jewellery, cash in hand subject to limits, urban land, yachts, boats and aircrafts are the assets that will be liable to wealth-tax in India. Principally, wealth tax is levied on non-productive assets of assesses, and thus the above assets, where used for commercial purposes, will be excluded from taxation. The current rate of wealth tax is 1 percent on the net wealth of the assessee, exceeding the threshold limit of INR 1.5 million.

The value of taxable assets for the purpose of wealth tax would be their value as on the last day of the respective financial year (FY). Further, such value of assets (except cash) will have to be determined in accordance with the valuation norms laid down in the Wealth Tax Act. In determining the value of the assets, debts owed by the assessee in respect of assets chargeable to tax are reduced from the taxable value of the assets. Thus, where you have purchased your brand new Mercedes on 'easy monthly installments', the outstanding value of the loan as at March 31 of the FY will go on to reduce the value of the motor-car in the wealth tax computation. Further, while the tax base for wealth tax is restricted to individuals, HUFs and companies; their interest in partnership firms/ association of persons (AOP) to the extent such firms/ AOPs possess specified assets is included in their net wealth and subjected to tax.

Exemptions and clubbing provisions:

In determining the wealth tax liability, one must be careful in examining whether an asset is liable to wealth-tax, as there are some exemptions that are available with respect to certain prescribed assets. For example, wealth-tax need not be paid in respect of one house of an individual/ HUF or on a plot of land which does not exceed 500 square metres. Neither does tax need be paid on any residential property that is let out for a minimum of 300 days in the relevant previous year, nor on any property which is held for business purposes. Motor cars that are held by an assessee for running them on hire or held as stock in trade are also not liable to wealth-tax. The same applies to jewellery that is held as stock in trade for the purpose of business. Other than the specified assets prescribed under the wealth tax law, no other assets such as investment in fixed deposits, shares or intangible property is subject to wealth tax in India.

It is also important to note that one cannot evade wealth tax by transferring ownership of taxable assets among family members with a view to disperse the value of such assets which could subsequently reduce the tax burden. When an asset is transferred to a spouse or a minor child of the individual, or to any other person for the benefit of his spouse or minor child, without adequate consideration, even if the ownership of that asset does not lie with the individual, he will be liable to pay wealth-tax with respect to those assets. Thus, the diamonds that you gift your wife on your anniversary, besides burning a hole in your pocket, will cause you to pay wealth tax, as the jewellery is deemed to be your wealth.

Filing of returns

The Indian wealth tax law requires every person subject to wealth tax in India to file a physical wealth tax return with the Income-tax authorities by July 31 (September 30 for companies) of the year following the FY. Another factor to consider is that while Indian residents are liable to pay wealth tax on their global wealth i.e. on those assets situated outside India too, but non residents including foreign companies are liable to pay tax only on assets situated in India.

World's Strongest & Largest Economy list 2007-08

Finally Indian Economy managed to enter into league of World's trillion dollar economies .

According to the World Development Indicators released on July 1, India was a $1.17 trillion economy at the end of calendar 2007.

The US retained its pole position as the largest economy with GDP of $13.8 trillion. Following are names of the largest countries in terms of GDP.

The list of World's largest/strongest economies goes as shown below :
(Rank - Economy value in $)
1. - US
$13811.2 billion - 2007
$13163.9 billion - 2006

2. - JAPAN
$4376.7 billion - 2007
$4368.4 billion - 2006

3. - CHINA(People Republic of China)
$3297.2 billion -2007
$2896.9 billion -2006

4. - GERMANY
$3280.0 billion -2007
$2644.7 billion - 2006

5. - UK(United Kingdom)
$2727.8 billion - 2007
$2377.0 billion - 2006

6. - FRANCE
$2562.3 billion - 2007
$2248.1 billion - 2006

7. - ITALY
$2107.5 billion - 2007
$1851.0 billion - 2006

8. - SPAIN
$1429.2 billion - 2007
$1224.7 billion - 2006

9. - CANADA
$1326.4 billion - 2007
$1271.6 billion - 2006

10. - BRAZIL
$1314.2 billion - 2007
$1067.5 billion - 2006

11. - RUSSIA
$1291.0 billion - 2007
$987.0 billion - 2006

12. - INDIA
$1171.0 billion - 2007
$911.8 billion - 2006

Crude oil may touch $175 a barrel by Diwali: Experts

Skyrocketing crude oil prices are likely to continue the upward march and could reach 175 dollar a barrel by Diwali unless there is significant decline in demand from growing economies, analysts say.

Crude oil prices have risen by about 40 dollars since March. Currently on New York Mercantile Exchange, oil traded near record high levels around 142 dollars.

"Considering the current situation and pace of price rise, crude oil rates may go up to 175 dollars per barrel in the global market. Prices may get fresh triggers, if Israel attacks Iran this year which would affect Mideast supplies," Religare Commodities Head (Commodity Business) Jayant Manglik told reporters.

High volatility spurred by uncertain geo-political tensions, slumping US economy and spiralling demand across the world would continue to support the already high crude oil prices, he said.

If you look at the technical chart, prices have moved upwardly in the last six months and we expect the bullish trend to continue further in the coming months. Prices may go beyond 175 dollars per barrel and touch 200 dollars per barrel," Mumbai-based Kotak Commodities Services Technical Analyst Dharmesh Bhatia said.

Amid the rising crude oil prices, there seem to be no respite for India and other countries, which are reeling under high inflationary pressure.

"Oil demand is rising higher than the supply. Although it is difficult to predict how much prices would inch up but they may rally in the range of 140-150 dollars per barrel,"Industry body Federation of Indian Chambers of Commerce and Industry (FICCI) expert Anjan Roy said.

"Price rise is driving countries to look at alternative energy and conservation of energy. I think this would keep a check on a rise in additional demand for crude oil," Roy added.

According to experts, crude oil prices would decrease only when the demand falls significantly, which seems unlikely, or there is improvement in supply position. Currently, the global demand is approximately 87 million barrels a day against the supply of 82 million barrels a day.

"The prices will decline only when demand falls, of which there is no clear evidence so far. But when demand starts falling due to degrowth, prices will also decline and this will lead to a downward spiral with low prices and increased supply," Manglik said.

A similar scenario was witnessed in the late nineties when high crude prices punctured fast-growing South East Asian economies and led to a downward spiral, he said. Roy said the prices could be brought down only if the supply gap is addressed.

Govt taking steps to tame inflation - Finance Ministry

The federal government is taking steps to tame inflation that was mainly driven by high commodity prices, a finance ministry statement said on Tuesday.India's wholesale price index rose to 13-year high of 11.42 per cent in mid-June, after the government raised retail fuel prices by 10 per cent last month. "Though this is the highest inflation in the last 13 years, it is largely commodity centric. Government is taking measures to moderate the inflationary pressure," the statement said, without specifying.

Reeling out data, the ministry said around 60 per cent of the increase in the prices of primary articles was accounted for by five commodities - iron ore, cotton, milk, fish and oranges. Even in the manufacturing sector, nearly 60 per cent of the increase was accounted for by eight products, six of which belong to the category of iron and steel products.

Last month, the central bank raised its key lending rate twice, first by 25 basis points and again by 50 basis points, to rein in inflation

India slips in global business climate ranking

India has slipped 13 places to 64th rank in a global list that measured business climate in 121 countries, as inflation and differences between the government and its Left allies dampened investor confidence. India has dropped from 51st place, whereas China is two notches down from last year's ranking at 79 in the Forbes list of 'best countries to do business. The list is topped by Denmark, climbing three spots from the previous year, followed by Ireland and Finland.


"India and China fell in this year's ranking as political instability demonstrated resistance to increasing personal freedoms. Higher inflation from food and other commodity costs, as well as increased burdens on entrepreneurs also held the world's most populous nations back as business destinations," Forbes said in an accompanying report.

Denmark, which rose three slots from last year, Ireland (up 19 places to No 2), Finland (up four to third place), the US (down three to fourth) and UK (up five to fifth). Big movers like Ireland, Estonia (No 10, up 24 spots) and Saudi Arabia (No 47, up 37) have limited bureaucracy standing in the way of entrepreneurs hoping to do business there. However, the world's largest economy United States declined one spot to the fourth place, whereas another economic giant United Kingdom retained its fifth position.

Pointing out that the Indian government has reduced controls on foreign trade and investment, Forbes said tariff spikes in sensitive categories, including agriculture, and incremental progress on economic reforms still hinder foreign access to India's vast and growing market.

"Privatisation of government-owned industries remains stalled and continues to generate political debate; populist pressure from within the UPA government and from its Left Front allies continues to restrain needed initiatives," the report noted. Forbes said that strong growth combined with easy consumer credit and a real estate boom fuelled inflation concerns in 2006 and 2007. This had led to a series of central bank interest rate hikes that have slowed credit growth and eased inflation concerns.


"The huge and growing population is the fundamental social, economic, and environmental problem," it said. Forbes analysed the business climates of countries, focusing on degrees of personal freedoms such as freedom of expression and right to participate in free and fair elections. "Investor protection examines the recourse held by minority shareholders in cases of corporate misdeeds, while corruption looks at the number and frequency of similar misuse of corporate assets for personal gain. Together with economic policies supportive of free trade and low inflation, these key points form a snapshot of countries' suitability for capital investment," the magazine said.


Developed countries like Germany (21st rank) and France saw declines in their respective rankings due to scandals in the banking sector and tougher barriers for entrepreneurs. One of the biggest falls came from Japan, which dropped to 24th rank from 21st position. On Japan, the report said, "... a Council on Economic and Fiscal Policy spelled out problems with the world's second-largest economy earlier this year. Among others, the committee's report cites the nation's 40 per cent corporate tax rate as uncompetitive compared with regional rivals like Hong Kong at 17.5 per cent and South Korea at 25 per cent."

"India's Biggest challenge is inflation " - P.Chitambaram

Finance Minister P Chidambaram considers inflation the country's biggest challenge today and regards becoming an open market as the way forward. Expressing concern at "the relentless rise" of crude oil, commodity and food prices, he put partial blame for the rising food prices on the "foolish" diversion of food to fuel. But he did not name the US, where food crops like corn are used for making ethanol. "Food prices have also been on the rise thanks to foolish diversion of food to fuel," he said, appearing on an hour-long special about India's business and economy - "India Rising: The New Empire" - on CNBC Sunday night.

Chidambaram also did not think that recent acts of terrorist violence would affect the investment climate in India. "Please remember, terrorist violence has affected bigger cities like London, Madrid, Tokyo, New York," he told the show host Erin Burnett discussing India's economic challenges. "If terrorist violence, terrorist action affects any city in India, it concerns all of us but that does not mean that investment has been jeopardised or is in peril," Chidambaram said. "India's biggest challenge now is inflation." India is building thousands of kilometres of roads, power plants, refineries and sea ports, he said referring to investment in infrastructure. "But surely the way forward is to become an open market."

Commerce and Industry Minister Kamal Nath, too, viewed infrastructure as "also a big challenge for us to keep pace with our growth." Infrastructure is just not roads, ports and airports, but also rural roads, which connect villages, drinking water, health and access to medical facilities. Envisaging large investment in infrastructure over the next five years, he said: "It is happening. We have to have huge investments in energy sector, ports.

So that's all happening, that's on the anvil." Asked how long controls on foreign investment would stay, Kamal Nath noted that retail is one of the very few sectors which are not open. "Rest are all absolutely open and we are taking in investments." Obviously because of liberalisation, foreign direct investment (FDI) had grown from $2.2 billion four years ago to 25 billion this year, he said. Asked if India could remain self-sufficient in food in view of its growing population, Kamal Nath said: "We have been self-sufficient except in edible oil and lentils, which are imported. And unless we have a monsoon failure, we don't see a problem even with these growing numbers."

Comparing India and China, the minister said: "We call ourselves the fastest growing free market economy. And there are differences in governance too." And while India's growth story is domestic market-driven, China's growth story is export market-driven. "But China has its own genius, we have our own genius," Kamal Nath said noting the two countries have good relations even as they compete with each other. Besides India's growth story, the CNBC special also featured a look at Tata Motors and the world's cheapest car, Indian movies, the world of call centres and Burnett practicing cricket with a team in India.

The programme also took a look at India's growing upper class, including the 60-storey house being built in Mumbai by the country's wealthiest man, Mukesh Ambani. And in stark contrast, it also took a quick glance at millions of India's homeless and others living in the world's biggest slum at Dharavi.

- Economic times