Indian Economy's GDP pegged at 5 perc for 2010-11

Indian Economy's fiscal deficit for year 2010-11 is predicted to be in line of 5 percent of GDP according to Nomura. Which means it is much less then the predicted.

The government is also looking at raising Rs 40,000 crore through disinvestment this fiscal. It has already raised over Rs 1.06 lakh crore from the sale of spectrum for 3G and Broadband Wireless Services (BWA) services.

The research firm also said that one-off expenses on pay arrears and fiscal stimulus are set to fade. Hence government would borrow 15000 crores less in this financial year.

I am waiting when India would see it's first budget with zero deficit, that day will be golden day for Indian Economy....cheers!!

Normal Monsoon brigtens hopes for decrease in prices :)

(posted under - Monsoon updates, Economy of India) -As the country is now completely witnessing normal monsoons all over, The monsoon is ahead of schedule by 9 days according to metrological department, The Inflation will surely come down in couple of months from now on..

The revival of monsoon rains, the main source of water for 60 per cent Indian farms, will lift soybean and groundnut crops in the world's top vegetable oils importer and help the cane crop in the Uttar Pradesh state, which produces half the cane in the world's top sugar consumer.

The weather office expects total June-September rainfall to be normal despite the June deficit.

Economy of India to grow at 8.3 percent

Assuming a normal monsoon, we expect GDP growth to surge 8.3 per cent during the financial year 2010-11, driven by robust industrial growth and resilient performance of the service sector," D&B said in a report.

Besides, it said that rise in consumption demand is likely to contribute majorly to the economic growth and help augment investments.

Healthy income levels on account of faster pace of job creation as well as broadening of tax slabs -- as proposed in this year's Union Budget -- will create higher disposable income with consumers, driving up demand.

Banks move to Mutual funds as loan applications dip

(posted under - Indian Economy, Mutual funds investing) - According to the latest RBI figures, the first week of April has seen a dip in outstanding loans. Total bank loans as on April 9 stood at Rs 32,41,255 crore, up Rs 1,167 crore over the previous fortnight’s levels. However, outstanding loans were marginally lower than the Rs 32,43,175-crore loans outstanding on end March 2010. The second half of March saw bank loans growing by over Rs 1,00,000 crore — a feat which banking sources say was achieved only by banks window dressing their books.

Banks have invested an additional Rs 50,016 crore during the fortnight ended April 9, taking their total MF exposure to Rs 1,05,519 crore. This is despite the central bank asking lenders to cut down exposure to mutual funds. Foreign exchange reserves were flat at $280 billion during the week-ended April 16, largely on account of revaluation of non-dollar assets.

Prediction : Indian economy to grow at 9.2 perc in 2010-11

(posted under - Indian Economy news) - The Centre for Monitoring Indian Economy (CMIE) expects the Asia's third largest economy's GDP growth to accelerate to 9.2 percent in 2010/11 from 6.9 percent in 2009/10.

The measures helped as the country's industrial output grew at its fastest pace in two years in November at 11.7 percent, the economy expanded 7.9 percent in the September-quarter and inflation jumped to a one-year high of 7.3 percent in December CMIE expects the wholesale price index, the main price barometer, to steadily fall to 7.7 percent in the June quarter and further to 3.8 percent March quarter of 2011.

India can join WTO pact

India is not a member of the WTO agreement on government procurement and has so far resisted the attempts by the developed countries like the US and European Union to subject Indian state purchases to the multilateral bidding rules.

While the observer status will not mean India immediately coming on the board, it could signal that the country would eventually play the ball, a source said.

The WTO agreement on government purchases is an accord among 30 select countries and is voluntary in nature.

The central government alone has an expenditure budget of Rs 10 lakh crore (approx $125 billion) of which at least more than one third is spent on state purchases. The multinational companies see it as a huge opportunity but find the procurement procedures falling short of global guidelines.

CII's Survey projects growth of 6-7 % for present fiscal year

(posted under - Indian economy news) - Out of 134 respondents participated in the CII Northern Region Business Outlook Survey, more than half said that India's economic growth is likely to be in the range of 6-7 per cent in the current fiscal.

"Global economic instability followed by slackening consumer demand are the two most important concern areas," it said.

The survey also said that the overall outlook for business is better for the current six months (October-March 2009-10) compared to the previous six months.

Over 50 per cent of the respondents expects an increase in investments during the current six months.

On exports, it said that the outward shipment seems to be much better for October-March. "Fifty-one per cent of the respondents expected an increase in volume of exports," it added.

India's exports are on downslide since October 2008 due to the global slump in demand.

Government of India approves FDI's worth over 1150 crore

(posted under - FDI's in india) - The government of india has approved 17 foreign direct investment (FDI) proposals worth Rs 1,158.78 crore.

Among the major proposals which were approved today are the FDI applications of the world's largest steelmaker ArcelorMittal and ductile iron pipe maker Electrosteel Castings, a government statement said.

ArcelorMittal, with an FDI of Rs 503.37 crore, plans to infuse foreign equity into a company engaged in manufacturing cold-rolled semi-finished iron and steel products.

The Kolkata-based Electrosteel Castings plans to issue and allot eligible securities including equity shares and/ or non-convertible debt instruments along with warrants on a private placement basis bringing in FDI worth Rs 600 crore.

Meanwhile, the government deferred a decision on 12 FDI proposals and rejected five on the recommendations of the Foreign Investment Promotion Board (FIPB).

The proposal to infuse 100 per cent foreign equity by Jaipur IPL Cricket Pvt Ltd (the promoters of the Rajasthan Royals which won the 2008 IPL), has been rejected by the government.

The government referred the proposals of Jet Airways to bring in Rs 2,000 crore FDI and the Mauritius-based investment fund Indium IV to bring in Rs 2,500 crore FDI, to the Cabinet Committee on Economic Affairs (CCEA) as the proposals are of value above Rs 600 crore.

Cheers - Indian economy to be worth $ 2 trillion by fiscal year 2014-15

India will be a $2-trillion economy in the next five years as its GDP growth is likely to average at 12 per cent in nominal terms powered by a huge consumption demand, Enam Securities has said.

"India's GDP is likely to grow at (an) average 12 per cent in nominal terms. Hence, India will be a $2-trillion economy by 2014-15," Enam Securities Head-Research, Nandan Chakraborty, and economist Sachchidanand Shukla said in a report titled 'India Strategy' released today.

This growth will be led by the huge consumption demand in sectors like FMCG, power, auto (small car hub), IT and pharma, it added.

The brokerage firm said insurance companies, financial services and equity markets will flourish as the country's annual savings pool grows to $700 billion from $400 billion at present.

"More than half of this ($700 billion) could flow into financial savings. With favourable demographics and average seven per cent real growth, India can sustain more than 30 per cent savings rate akin to the Asian tigers, or China and Japan. This will transform the domestic financial services space," Enam said.

Life insurance penetration in India, which is already a USD one-trillion economy, is estimated to reach a level of 4.4 per cent over the next two years as insurance companies focus on expanding into rural India, the report said.

source - economictimes

IMF predicts Indian economy to grow 5.4% in 2009

The International Monetary Fund projected Indian economic growth at 5.4 per cent in 2009, implying a slower growth in the second half of this calendar year.

In its twice-yearly World Economic Outlook released in Istanbul, the Fund lowered the projection for the next year by 0.1 per cent to 6.4 per cent.

The Indian economy grew by 5.8 per cent in the first quarter and 6.1 per cent in the second quarter of this calendar year.

Finance Minister Pranab Mukherjee and Planning Commission Deputy Chairman have expressed doubts whether the economy will grow at the rate of 6.1 per cent in the third and fourth quarters of 2009 due to an weak monsoon.

The economy grew by 7.3 per cent in 2008 and 9.4 per cent in 2007. If the IMF projections prove correct, it would grow at the least rate in recent years due to the global financial crisis and drought.

source PTI

Recession easing - Govt expecting rise in corporate tax

(posted under Corporate tax updates) - i was just surfing on net about the economic updates and one thing is sure that recession has almost dimnished but earlier the news about a double dip recession were prevelant , but as the exports have increased and inflation has moved upwards again after a four months dip so the government particularly finance ministry has become optimistic and have already predicted that there would be marginal increase in corporate tax for coming quarter as banking and automobile sector has performed exceptionally well.


The finance ministry expects corporate tax receipts at 2.57 trillion rupees in 2009/10. Corporate tax receipts were at 493.39 billion rupees during April-August. "We are expecting a marginal improvement in corporate advance tax payments this quarter. The finance ministry had revised upwards its direct tax receipts target to 4 trillion rupees from 3.7 trillion estimated in the July budget.

Economy of austerity - ministral spending to decrease for fiscal year 2011

(posted under - politics of austerity, finance ministry updates) - The Finance Ministry in the Budget Circular for 2010-11 said, "The estimates (RE 2009-10) must confirm to instructions, which stipulate a 10 per cent and five per cent cut in non-plan, non-salary expenditure and other economy measures."

For the next fiscal, the circular added, "It is necessary to review the existing expenditure budget to priorities the activities and schemes, both on the plan and non-plan side and identify those activities and schemes, which can be eliminated or reduced in size or merged with any other scheme."


As part of its economic drive, the Finance Ministry, earlier in the month, advised ministries and departments to cut by 10 per cent expenditure on travel, seminars, exhibitions and other office expenses. In case of other non- plan expenditure, the they were asked to reduce expenses by five per cent.

The austerity move also includes complete ban on holding conferences in five star hotels.

These measures were announced as the Centre faces increasing burden on its exchequer following economic downturn and drought.

"There was further need for economy and rationalisation of expenditure in view of the current fiscal situation and that arising out of insufficient rains in large parts of the country and consequent pressure on government resources," the Finance Ministry had said earlier this month.

The Budget circular asked all ministries and departments to ensure that all schemes that have been discontinued, do not find mention in revised estimates for 2009-10.

source - economictimes

Cheers - Advance tax collections increases by 20 percent

(posted under - Advance tax collection) - Mumbai accounts for almost 40 per cent of the country's total tax collection.

The growth is likely to come on the back of a higher collection from banking, oil and gas and auto sectors, an Income Tax source said.

"Banks, auto and oil and gas sectors have done well. In fact, some of the banks have exceeded our expectations," the source said.

India's premier bank, State Bank of India has shelled out Rs 1,838-crore as advance tax while the country's second-largest, ICICI Bank, has paid Rs 501-crore as advance tax for Q2, the source said.


Another private bank, Yes Bank, has paid Rs 58-crore rpt Rs 58-crore as against Rs 33-crore it paid as advance tax in Q2 of last fiscal.

Tata Group companies, Tata Steel and TCS also paid a higher advance tax in Q2 at Rs 400-crore and Rs 220-crore respectively, source said.

While Tata Steel paid Rs 230-crore as advance tax in Q2 of FY 09, TCS paid Rs 81-crore.

Finance minister says not to exceed borrowing target

India's government will not borrow more from the market than its budget target for 2009/10.

The government plans to borrow 4.51 trillion rupees ($93 billion) in the fiscal year to fund a fiscal deficit forecast at 6.8 percent of gross domestic product.

-economictimes

India to invest upto $10 bn in IMF

India is to invest up to $10 billion in the International Monetary Fund as part of a major thrust to wrest a greater say in the running of international financial institutions, Finance Minister Pranab Mukherjee said in recent BRIC countries meetings being held at london.

"India has decided to invest up to $10 bn of its reserves in notes issued by the IMF," Mukherjee said after a meeting of the finance ministers of Brazil, Russia, India and China (BRIC) in London.

The Indian pledge is part of a total of $80 billion that the four BRIC countries will invest into the IMF in order to replenish its fund aimed at helping out countries that are struggling in the current financial crisis.

China will account for $50 billion of this amount, and the rest will be borne by India, Russia and Brazil.

In return, the BRIC countries want a greater say in the running of the IMF and other international financial institutions such as the World Bank, including a larger share of quotas and voting, said Brazil's Finance Minister Guido Mantega.

Part of the BRIC meeting was joined by US Treasury Secretary Timothy Geithner in a move that Mukherjee described as "an acknowledgement of the group's emergence as a key voice in global economic and financial issues".

Ministry of Roads transport to invite bids for 1500 kms of roads

The government will invite bids by this year-end for three mega projects worth around Rs 14,500 crore in the road sector, Road Transport and Highways Minister Kamal Nath said today.

"We will invite bids for three mega projects by the end of this year, we are looking at mega projects in which each project for building 500 km of road will be worth USD 1 billion," Nath told reporters on the sidelines of the SIAM annual convention here.

"We are going to put in place 11,000 km of roads worth Rs 1 lakh crore in 2009-10 under Work Plan I," Nath said, adding that challenges in capacity building will be addressed and all corrections will be made by September 30.

He said India's automobile industry should aim at producing 250 lakh vehicles by 2015 for which his ministry will build the necessary road network.

Earlier, he had said that 20 km of roads will be built in a day in the next two years amounting to an investment of Rs 2,00,000 crore.

Disinvestment updates - Govt to sell stake Satluj Jal vidyut

(posted under - disinvestment news) - The government may sell 10 percent of its stake through a public offering in power producer Satluj Jal Vidyut Nigam Ltd. The Himachal Pradesh government holds 25 percent stake in the firm, while the remaining 75 percent is held by the federal government. "

Himachal Pradesh government has given NOC (to the federal government) and we have supplied them a roadmap for disinvestment in seven months," the company official told reporters. The company currently has a capacity to generate 1,500 megwatt of hydro power and it aims to raise the capacity to 4,800 MW by 2017. He said the roadmap was supplied two months back to the Department of Disinvestment.

India has two economies - official and Black economy

According to the Annual Information Return (AIR) filed with the government, high-value transactions amounted to more than Rs 55.7 lakh crore in 2007-08, almost double the Rs 27 lakh crore for the previous year. But about 30% or roughly 1 million of the 3.3 million transactions were without PAN being cited.

The department regards many of the high-value transactions as suspicious. The proportion of cases where PAN is not cited is highest in property sales of a declared value of Rs 30 lakh or more. Barely one in four such sellers has provided PAN.

Similarly, almost two-thirds of those who have cash deposits of Rs 10 lakh or more in savings bank accounts have not provided a PAN to the bank. Over half the credit card transactions of Rs 2 lakh or more have no PAN tagged to them.

Even more shockingly, of the 3,100 transactions of Rs 5 lakh or more in RBI bonds, aggregating to Rs 3.52 lakh crore, about 10% were carried out without mentioning any PAN.

But PAN not being provided is not the only reason the department is suspicious. It is also because in thousands of cases where a PAN has been provided, it is unable to trace the transaction back to the beneficiary.

In some cases this is because the PAN provided has turned out to be fake. In others, there are two or more PANs being used by the same person. In one such case, when the I-T department investigated further it found that the lady holding the two PANs had an income of over Rs 40 crore but had disclosed no income in her return for that year.

Another interesting case is that of a prominent US-based bank. The data provided by the bank on credit cards it had issued showed that just four PANs accounted for thousands of crores of rupees of transactions. On being confronted with this, sources said, the bank explained it away as a case of faulty data entry.

The department's suspicions are further strengthened by the fact that the Rs 3.12 crore collected through income and corporate taxes in 2007-08 does not quite square with such a large volume of high-value transactions.

A thorough investigation and linking of the transactions to the actual beneficiary could make the treasury richer, it feels. However, the scale on which the investigations are needed is simply beyond its capacity given the manpower available, department sources confessed. This has been conveyed to the government.

The AIRs are routinely reported to the I-T department for further investigation. The components include cash deposits of Rs 10 lakh and above in savings bank accounts, purchase and sale of immovable property above Rs 30 lakh, purchase of bonds and debentures, share transactions of Rs 5 lakh and above and credit card expenditure of Rs 2 lakh or more.

All information in the AIRs is supposed to be assessed and analysed in I-T investigations and matched with the I-T return of assessees against the PAN numbers mentioned in these high value transactions.

source - economictimes

No debt waiver for farmers this time - FM

With fiscal deficit increasing and adding to the government woes is deficit monsoon in almost entire country still Finance minister said that no proposal for farm debt waiver this time around.

"There is no such proposal," Finance Minister Pranab Mukherjee said when asked if the government was considering a fresh debt waiver scheme to give relief to farmers.

The UPA government had last year announced a nearly Rs 71,000 crore farm loan waiver scheme to offer relief to small and marginal farmers and one-time settlement scheme for large ones.

Talking to reporters after holding a review meeting of Regional Rural Banks, he exuded confidence that the economy would clock over six per cent growth despite weak monsoon.

"No doubt, this year we are not expecting to reach nine per cent growth. This year we are projecting six per cent plus growth," he said, adding that the full impact of drought will be known to all as and when it is felt.

Meanwhile, Planning Commission Deputy Chairman Montek Singh Ahluwalia said the poor monsoon will adversely impact farm production and eat into economic growth.

"The existence of drought by itself can lead to some shaving" off of the growth projections. - said Ahluwalia

India's arms imports to touch $30 bn by 2012

India's arms imports are expected to touch $30 bn by 2012 even as the domestic defence market is poised to grow to $700 mn in five years, according to an industry lobby report.

The report submitted to the defence ministry by the Associated Chambers of Commerce and Industry (Assocham) said: "India's arms imports alone would rise to $30 bn by 2012."

"The Defence Offset Facilitation Agency (DOFA) and the armed forces in consultation with India Inc should work out a comprehensive strategy to ensure that defence imports happen at extremely competitive rates," Assocham president Sajjan Jindal said.

DOFA, under the Department of Defence Production, is a single window agency to implement the government's defence offset policy.

Assocham has urged the government to allow India Inc to participate in defence deals as the domestic defence market would expand to over $700 million in four-five years.

According to the chamber, if the Indian economy grows at a steady rate of 7 percent, the defence spending would exceed 3 percent of the gross domestic product (GDP) in future.

"This could be used to finance additional capital outlays for modern equipment," the Assocham report said.

Currently defence expenditure accounts for around 2.5 percent of the gross domestic product (GDP). India has upped its defence expenditure by 34 percent to Rs.141,703 crore ($28 billion) for the fiscal 2009-10.

India is the world's largest importer of defence articles with its armed forces buying over $6 billion worth of military hardware every year.

The paper also called for raising the foreign direct investment (FDI) limit in the defence sector to 49 percent from the current 26 percent.

Higher FDI will help procurement of latest technologies as per provisions of the latest defence offset policy, Assocham said.

-source-economictimes.com