India grew 6.5 percent in FY09 , inflation to fall further - PM

India's economy grew an estimated 6.5 per cent in the just-ended 2008/09 fiscal year and consumer price inflation is expected to moderate in five to six months, Prime Minister Manmohan Singh said on Monday.

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A global economic slump and slowdown in domestic demand have weakened economic growth in Asia's third largest economy, but falls in commodity prices have helped moderate prices.

"The wholesale price inflation is already down to around 1 per cent and there is a time lag for the consumer price inflation to also fall," Singh told a news conference at Ludhiana. "But I am sure CPI inflation will moderate in five to six months," he said at the last lap of a month-long election campaign in the northern state of Punjab.

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India's wholesale price index rose 0.70 per cent in the 12 months to April 25, above the previous week's annual rise of 0.57 per cent.

World Bank to lend $ 3 billion to India

The World Bank has agreed to help India with $3 billion of increased investment as the global financial crisis undermines private
financing for the country's much-needed infrastructure agenda, the bank announced on Thursday.

"Part of the additional financing include a line of credit to the India Infrastructure Finance Company Limited (IIFCL) to help finance private-public partnerships in infrastructure; funding for the Small Industries Development Bank of India (SIDBI) to provide credit to small and medium enterprises, and assistance to PowerGrid to expand its transmission network," the World Bank said in a written statement.

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The development institution has provisioned this additional amount as part of the total financing envelope of $14 billion proposed in the India Country Strategy over 2009-2011.

India had requested an additional $5.6 billion over the next two years. Having provisioned the $3 billion, the World Bank said it would need to examine the balance $2.6 billion and work with the Indian government over the coming weeks to clarify details.

The strategy, which is geared to help India propel infrastructure development, support the country's seven poorest states, and respond to the financial crisis, was discussed by the World Bank board last week in Washington DC.

"Other areas which could receive support from additional financing include the National Housing Bank and the recapitalisation of state banks, the details of which are yet to be discussed with the government of India," the statement said.

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The statement said that India was the largest borrower from the World Bank's International Development Association (IDA) and second largest borrower from its International Bank for Reconstruction and Development (IBRD) in fiscal 2008.

The World Bank's $15.1 billion-portfolio in the country covers 61 active investment projects.

In the current financial year, the World Bank's oard approved $2.7 billion in funding for nine new projects for India spanning a range of sectors including infrastructure, education, health and rural development. Of this, $1.3 billion came from IBRD and $1.4 billion came as interest-free credits from IDA.

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Indian Foreign trade policy to continue as same

The five-year foreign trade policy that lays ground rules along with incentives and disincentives for conducting imports and exports has been extended beyond March 2009 to enable the new government to give its policy direction to the country's external engagement.

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The Foreign Trade Policy (FTP), which was unveiled by the UPA government on September 2004, was to expire on March 31, 2009. India's foreign trade has seen a sharp growth in the last five years. Exports during 2007-08 grew by 22.9 per cent from 126 billion dollars in the previous fiscal, while Imports went up from 185.7 billion dollar in 2006-07 to 235.7 billion in the last fiscal.

India's Forex reserves in trouble - Goldman Sachs

Decline in capital inflows as a result of ongoing global financial turmoil may see India's foreign exchange reserves depleting by $ 39 billion during 2008-09, says a report by global banker Goldman Sachs.

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India's foreign exchange reserves, which were around $ 310 billion in March 2008, have been declining steadily and may go down to $ 271 by the close of current financial years, the report said.

The decline would mainly be on account of rising current account deficit, it said, adding "capital inflows fell to $ 13.2 billion (in Q1 2008-09) from $ 17.3 billion in Q1 of 2007-08 and $ 25.4 billion in the previous quarter (Jan-March)."

As per the latest RBI data, the country's foreign exchange reserves declined to $ 292 billion as on September 19, 2008, which can be attributed to higher trade deficit and declining portfolio investment.

Pointing out that the current account deficit will remain high during the year, the Goldman Sachs report said, "it would be a bigger concern with oil at $ 150 a barrel than at current prices."


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It further added, "with oil prices coming off substantially, one of the biggest threats to the current account deficit has been alleviated."

Even in the event of a sudden stop in capital flows, the report said, country's buffer of forex reserves would be sufficient to fund the current account and external debt payments.

At $ 271 billion in March 2009, the report said, the country would have sufficient reserves to meet 10.3 months of import bill, down from 15 months of imports in March 2008.


also read : US recession - Why it happened


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US Recession and effect on India

American international Group popularly known as AIG is world's biggest Insurance provider but it ran into crises in mid september 2008 when it showed signs of cashlessness (having no cash reserve at all). Everyone was surprised when the news of AIG going for sell off came open and it spread like fire in a forest. soon the news reached fed reserve(Federal Bank) and it had no other option then investing in AIG by giving it loan of US$ 85 billion and purchase 80 % stake in world's largest insurance provider.

also read : Biggest US Bank failure ever


The Fall of AIG(American international Group) :

So what was the reason behind cashlessness of world's largest insurance company?? The decline of AIG started after the attack on World trade center's on 9/11 by terrorist groups. AIG used to provide insurance cover to world's biggest organizations and was running soundly until the credit crunch and mortagage crises began to start in US economy, various US investment banks like Lehman Brothers(158 years old institution), Merill Lynch, Morgan Stanley, Bear Sterns etc . provides loans in real estate. US public wanted expensive houses which were beyond their budget. US banks gave them loans thinking of gaining more profits from the interest rates which they will get on loan amount however they overlooked the most important condition which was "whether the customer is eligible for purchasing house which was out of the budget for him/her" still they gave the loan which eventually was never returned back to the lender bank.

Now small mortage banks which felt the pinch of credit crises earlier took loans from bigger banks in order to sail their bank to shore in these tough times when their was almost zero income for small mortage banks, now big investment banks like Lehman Brothers, Merill Lynch, Morgan Stanley, Bear Sterns gave loan to these much smaller banks which were facing credit crunch at that time thinking that they will get batter rewards for the investments made in mortagage banks.

To insure their loan to smaller banks they insured their investment with insurance company AIG in particular. Since AIG was dealing with much bigger banks the risks were even higher for insurance companies like American international Group(AIG). Now bigger investment banks never got their money back from smaller mortagage banks and their amount was dead. so the bigger banks could not pay the premiums to insurance companies and this was the time when insurance companies started helping them according to the terms and conditions of the insurance type done with the banks, during this time there was no source of income for insurance companies like AIG.



also read : Biggest US Bank failure ever


This was the time when the cash reserve of Insurance companies reached almost nil. Investment banks which had invested in Credit crunch facing mortage banks were already on verge of bankruptcy. US citizens lost their faith on Financial Institutions and began to sell their shares, the environment of investment bank stocks was discouraging. Share Markets all over the globe felt the heat and all the major indices including DJIA, Standard and Poor index, NASDAQ, BSE, NSE felt drastically.

Hence Federal Reserve bank had to act fast to control the situation and offered loan of US$85 billion to the AIG for improving it's financial conditions, due to this act Fed reserve acted as last hope for many other banks.

Looking at present uncertainity the US government has made an announcement for providing a US$700 billion package to the financial market so that the US $ remains the strongest US economy in future too. but their has been resentment in citizens of USA when they heard about the news that US government is pumping money earned from taxes into the Financial Market to control global uncertainities .



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my fingers are crossed when it comes to question "will supremacy of US $ continue after worst economic depression after the depression of 1929". lets wait and see how things unfold in coming couple of months.

Recently markets tumbled most due to biggest US bank failure in history(Washington Mutual).
Read about Washington Mutual Failure now!
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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

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

Direct Tax collection up 71% then previous year

India's direct tax collections continued to grow at a robust pace to log a 71.28 percent rise in the first two months of this fiscal at Rs.228.4 billion ($5.7 million), against Rs.133.35 billion in the like two months of the previous fiscal.

The growth in personal income tax was the highest with 73.05 percent at Rs.146.9 billion, against Rs.84.89 billion, while the corporate tax mop-up was higher by 68 percent at Rs.81.26 billion against Rs.48.35 billion. "Direct tax collections have been witnessing a high growth due to better tax compliance by the taxpayers and an improved tax administration," a statement issued by the finance ministry said Wednesday.

Finance Minister P. Chidambaram said last week that the Central Board of Direct Taxes (CBDT) would meet soon to revise upward the official estimate on direct taxes for this fiscal, set at Rs.3,650 billion. "For 2007-08, direct tax collection was Rs.3,144.68 billion. This represents an increase of 36.62 percent over the previous fiscal, and 117.56 percent of the original budget estimates," he said. "In four years, this has been tripled - that is from Rs.1,050.88 billion to Rs.3,144.68 billion.

This is a remarkable achievement and I compliment the department for this extraordinary achievement," he added. "The cost of collection has come down to 0.54 percent. For every Rs.100 collected, the department spends only 54 paise. Now, this is the lowest in any jurisdiction in the world."

India not a trade friendly nation - World Economic Forum

Hong Kong and Singapore are the two economies most conducive to global trade, according to a ranking by the World Economic Forum released on Wednesday. The World Economic Forum's new Global Enabling Trade Index survey of 118 economies looked at ten factors impacting trade, such as tariffs, customs administration efficiency and availability of transport and communications infrastructure.

The forum ranked Hong Kong number one thanks to its "very open market" as well as a "secure and open business environment." Singapore's open business environment was also complemented by a "highly efficient and transparent border administration" and a well-developed transport and communications infrastructure.

Third and fourth places were taken by Sweden and Norway respectively, while Canada was ranked fifth. The world's largest economy United States, however, did not figure in the top ten, coming in at number 14, dragged down by its border administration, judged to be "lacking some efficiency." "Customs procedures (in the United States) are seen as comparatively burdensome (ranked 42nd) and there is a relatively high cost to import (ranked 65th)," said the WEF.

Export giant China fared even worse, ranked just 48th, reflecting "underlying weaknesses in its economy and its trading regime." "Above all, China is a fairly closed country. Although its economic success relies heavily on exports, imports are still severely inhibited by tariff and non-tariff barriers, despite the country's accession to the WTO," it said. Fellow Asian giant India ranked even further down the list, at 71st place, due to its market access, which is rated as "severely restricted." Brazil was not far behind India, at 80th place, as its markets remain "fairly closed, with tariffs... inhibiting goods imports."

June 13 - Inflation soars to 8.75% on rising prices

Surging food and fuel prices further pushed up inflation to 8.75 per cent for the week ended May 31 from 8.24 per cent in the previous week, its highest in 7 years. Inflation may go beyond a 13-year high of 9 per cent as a result of the steepest-ever hike in petroleum prices, analysts said. "It (inflation) could cross 9 per cent in the near term owing to the hike in petrol and diesel prices," HDFC Bank chief economist Abheek Barua told reporters recently.

In a bid to curb inflation, the Reserve Bank India on Wednesday hiked the repo rate — the rate at which banks borrow from RBI — by a quarter point, from 7.75 per cent to 8 per cent, giving a clear signal that for it inflation is a bigger priority than growth. It may not tame inflation in a hurry, but will discourage spending over a period of time, as banks pass on their higher cost of funds to borrowers. But all is not over yet.

For, a slim majority of economists now expect the RBI to raise its key lending rate once more in 2008 after this week’ssurprise 25 basis point increase to contain inflation expectations, a media poll has showed. Many also expect the RBI to raise its cash reserve ratio (CRR), the main policy instrument used over the past 18 months, by 25 to 100 basis points in coming months to clamp down on inflation-stoking surplus cash.

The government, under pressure to contain prices ahead of state polls this year and national elections due by next year, has also cut import duties on edible oil, curbed rice exports and forced steel and cement companies to cut prices.

India's Fiscal Deficit Higest in World - still increasing

India is one of the fastest growing economies in the world. The foreign exchange reserves reach a new high every week (($314 billion), inflation has not been controlled due to hike in the price of crude oil (nearly $135) and interest rates continue to be low. Indian fiscal deficit is the highest in percentage among the other countries of the world.

What is fiscal deficit?

Fiscal deficit is essentially the difference between what the government spends and what it earns. It is expressed as a percentage of GDP.

India's fiscal deficit was brought down to 3.17% (Rs 1,43,653 crore) of the gross domestic product in 2007-08 from 3.8% in 2006-07. The government has promised to cut the deficit further to 2.5% of GDP (Rs 1,33,287 crore) by the end of 2008-09, but looking at the way things are going, economists say, it is unlikely the government will meet its target

India's fiscal deficit continues to be among the highest in the world and underlying pressures are not entirely showing up in headline fiscal numbers, Reserve Bank of India Governor Y. V. Reddy said.

Earlier in the Budget 2008 - 09 document, the government's revenue expectations are realistic, but expenditure appears to be underestimated. This may be because expenditure to the tune of 2.0-2.5 per cent of GDP remains off budget. There is no provision in the budget for the loan waiver of $16.8 billion to the farmers (earlier Rs.60,000 crores and now it is increased to Rs.71,680 crores) and huge amount of $6.36 billion arrears to the Central Government employees (Rs.27145 crores for the Central sixth pay commission recommendations), which is expected to 1.85 per cent of the official GDP for 2008-09. The loan waiver scheme will benefit 3.69 crore small and marginal farmers and 59.75 lakh other farmers. This is the vote bank for the next 2009 general elections to the Congress Party.

The budget 2008 - 09 document also says that the Plan expenditure is going to rise by around Rs 38,000 crores or around 19 per cent. Non-plan expenditure will rise by a much smaller amount, by Rs 64,806 crore or 17 per cent. The actual figure may be much higher.

The fiscal deficit for 2008-09 is forecast at 2.5 per cent of GDP, lower than the deficit for 2007-08 of 3.1 per cent of GDP for 2007-08, and also lower than the 3 per cent of GDP mandated by the Fiscal Responsibility and Budget Management (FRBM) Act. It is highly unlikely that the government will achieve its forecast.

While net borrowings for 2008-09 have been budgeted at Rs 1 trillion and the gross borrowing estimate is at Rs 1.45 trillion. Critically, it does not include oil bond redemptions of Rs 13000 crores. It remains to be seen how the government finances maturing oil bonds. Therefore there appears to be a considerable upside risk to market borrowings for 2008-09. Though aimed populist in nature, many of the announcements made could fuel inflation and put pressure on the fiscal deficit in 2008-09.

Economists point out that all oil bonds and a part of fertiliser bonds are not accounted for in the Budget. This means that the government does not have to include these expenses while calculating the surplus or deficit for the year.

Subir Gokarn, Asia Pacific economist at rating agency Standard & Poor's, says that oil bonds are just liabilities and not real expenditure for the government and hence, technically, they cannot be added to the fiscal deficit.

Tax collections were at a record Rs 5,88,000 core in 2007-08 helped by robust economic growth and corporate profitability. However, with growth likely to slow down in 2008-09, it remains to be seen whether the same buoyancy will be maintained.

Also, not every expert believes fiscal deficit is worrisome. Dr Ashima Goyal, professor at Indira Gandhi Institute of Development Research, believes a high fiscal deficit is an indication that the government is spending more on "productive expenditures."

"We are seeing the centre's fiscal situation is improving but I think there are several underlying fiscal pressures not entirely evident in the numbers," Reddy told a conference in New Delhi on 26 May 2008.

India aims to bring down its fiscal deficit to 2.5 percent of GDP for the 2008-09 financial year, compared to 3.1 percent in 2007-08, but financial analysts fear a $17 billion scheme to write off the debts of millions of small farmers and tax cuts could trip up efforts. According to the Fiscal Responsibility and the Budget Management Act operationalised in 2004-05, the government must reduce its fiscal deficit to 3 pct of GDP and wipe out its revenue deficit by 2008-09.

But it has already missed its revenue deficit target and expects it to be 1 percent of GDP in the year to end March 2009. Reddy said the fiscal deficit as a percentage of gross domestic product continues to be among the highest in the world.

Market borrowings finance more than half of the gross fiscal deficit and the rest of the gap is filled by small savings, provident funds, reserve funds and deposits and advances.

The gross fiscal deficit covering both state and central government is estimated at 5.5 percent in 2007-08, according to official estimates, down from 9.5 percent in 2002-03.

Fiscal deficit will be more in the coming months due to oil prices. Crude oil price of $35 per barrel in BJP government has been increased to $135 in Congress government which is nearly $100 difference per barrel. Congress Government is searching many options to recover the loss of PSUs and trying to reduce other taxes and duties. Increase of each one dollar hike in crude oil will give huge loss of Rs.3000 crore to Public Sector Undertakings. Central Government has no option except to increase the prices of petrol, diesel and gas for recovering some extent of losses

India, China growth cannot offset global slowdown

Emerging economies such as China and India are growing faster than the rest of the world but still lack the firepower to offset weaker growth in the US and European Union, Fitch Ratings said Monday.

The main emerging markets commonly known as BRIC -- Brazil, Russia, India, and China -- remain very dependent on exports to the industrialised economies with a combined trade surplus of 500 billion US dollars, said James McCormack, head of sovereign ratings in Asia for Fitch.

"The trade flows do not support the emerging markets contributing to offset a recession in the US and weakness elsewhere," McCormack said at a Fitch conference in Singapore.

Many economists say the United States, the world's largest economy, is effectively in recession.

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Some analystts have seen the rapid economic expansion in India and China as reasons for optimism even if the US and other advanced economies weaken.

But Fitch Ratings argues otherwise. "They (BRIC economies) are running very large combined trade surpluses in the order of 500 billion dollars... so if there's weakness in the advanced economies, you are going to see weakness in the emerging markets," McCormack said.

"The trade flows are going the other way, so the conclusion that we reached is that strong growth in the emerging markets is not really going to help offset weakness in the advanced economies."

Both India and China still account for a relatively small portion of global imports which means their economies' influence on international growth is limited, the US ratings agency said.

also read : How to start online share trading

India only accounts for two percent of the world's gross domestic product, said McCormack.

"So in some sense, it doesn't matter how fast India grows and it's not a very open economy," he added.

"It's not really going to contribute to stronger growth in other markets. It doesn't import that much. It's just too small." - Fitch Ratings.

also read : Online Share Trading Guide

Tata Group is world's sixth most reputed business group

Diversified Indian conglomerate Tata group has emerged as the world's sixth most reputed company, but the country's most valued firm Reliance Industries failed to make the grade.Tata group leapfrogged over 100 positions from last year's 124th rank in the annual Global 200: The World's Best Corporate Reputations list, compiled by US-based Reputation Institute.

The global list, which includes 10 other Indian companies, has been topped by Japanese auto maker Toyota, followed by US-based internet search giant Google, Sweden's Ikea, Italy's Ferrero and another American firm Johnson & Johnson.
The Ratan Tata-led group is joined by India's second largest software exporter Infosys Technologies in the Top-50 league at 14th position.


However, at least nine other Indian firms, which were among 600 companies considered in a survey to prepare the list, could not make it to the final 200. These firms include Mukesh Ambani-led RIL, the country's biggest by revenue among private sector firms and overall largest in terms of market value.


Other Indian companies that were considered for the list, but failed to make the cut include the biggest private sector lender ICICI Bank, top private and public sector telecom firms Bharti Airtel and BSNL, IT giant Wipro, Birla group's Grasim Industries, tobacco-to-consumer goods conglomerate ITC as well as two state-run firms -- oil refining and marketing major BPCL and national carrier Air India Ltd.


While releasing its latest Global Pulse report, Reputation Institute said that Tata group and Air India have the strongest and weakest corporate reputations respectively among the companies from India. Besides Tata and Infosys, other firms that made to the top 200 list include, Maruti Udyog (Suzuki) Ltd, State Bank of India, Hindustan Lever Ltd, Hero Honda Motors, Life Insurance Corp of India, Bajaj Auto, ONGC, Mahindra and Mahindra and Indian Oil Corp.


Both Tata and Infosys have gained over 100 spots each to join the top tier of global companies.India's Tata Group and Infosys Technologies saw their reputations increase by over 8 points in 2008, and catapulted over 100 spots in the ranking to join the top tier of global companies in 2008, in recognition of their growing role among the world's business elite," the report said.


However, the highest jump in ranking has been seen by China's Faw Group (ranked 41st with an improvement of 178 spots), followed by Norway's Coop, Canada's Sobey's and Japan's AEON, all of which have gained over 100 spots.


Maruti, the country's biggest car maker, has been ranked at 77th, SBI at 107th, HLL (now renamed as HUL) at 131st, Hero Honda at 147th, LIC at 161st, Bajaj Auto at 169th, ONGC at 186th , M&M at 191s and IOC at 199th position.


Globally, food and beverage giant PepsiCo, headed by a person of Indian origin Indra Nooyi, has been ranked 100th.
Tatas are ranked higher than companies like Walt Disney, Marks and Spencers, Xerox, Colgate-Palmolive, Sony, Honda, General Electric (GE), all of which are in the top-50.


The survey was conducted on 600 largest companies from 27 countries, out of which 200 were selected for the list. Toyota earned the highest ranking with a score of 86.53, followed by Google with 85.23 points.


Reputation Institute said that all the 200 companies earned scores higher than the global mean of 64.2 points, but despite earnings better-than-global average, the companies ranked 51-200 have significantly weaker reputations than the top tier companies.

also read : effect of increase in oil prices on indian economy

Indian exports to non-US markets increasing: Report

The focus of India's exports is shifting from the traditional US market to the UAE, a Dun & Bradstreet report said.

The US has traditionally been India's leading export destination. In FY 2007, US accounted for as much as 14.9 per cent of the total merchandise exports worth an estimated $ 18.9 billion, the report said.

Though US's share in India's merchandise exports declined from 20.7 per cent in FY 2003 to 14.9 per cent in FY 2007, in value terms the shipments increased from $10.9 billion to $18.9 billion.

"This is an indication of India's growing preference for trading with other emerging markets by diversifying its product group and improving its quality," the report added.

The UAE, the second-largest export market, accounted for 9.5 per cent of the country's total exports in FY 2007, while in FY 2003 it accounted for 6.3 per cent only, the report said.

The spurt in exports to the UAE can be largely attributed to a rise in shipments of mineral fuels, mineral oils and products, which constituted almost 30.4 per cent of total exports to the UAE, the report said.

UAE is also an important market for re-export in the entire Middle-East region. In 2005, the total re-export was as high as $26.4-billion.

India's exports to China have also seen a rapid growth from just 3.7 per cent in FY 03 to 6.6 per cent in FY 07.

India's export share to Singapore has gone up from around 2 per cent in FY 2001 to 4.8 per cent in FY 07.

Indian economy not likely to slowdown - Lehman Brothers

Anti-inflationary measures are unlikely to turn India into a slow growing economy, while other Asian nations could face the situation of rising prices and economic stagnation, a latest report says. "We do not believe that India would be affected significantly in a stagflation scenario and growth would remain strong in relative terms...," global research firm Lehman Brothers said in a recent research report.

However, even as the economic growth is projected to remain strong, interest-rate sensitive stocks could be adversely impacted during stagflation situation in Asia. Stagflation refers to a situation when inflation is rising and the economic growth is simultaneously slowing down. The negative impact is likely be felt by interest rate-sensitive stocks or by companies that are not in a position to pass on cost pressures to consumers, Lehman said.

Further, investment spending is unlikely to witness a substantial slowdown primarily on account of significant shortages in key sectors such as steel and power. The report pointed out that risks out of a stagflation scenario would be high for the banking sector, infrastructure, automobile and cement firms. "The risks are significant for part of the banking sector, companies with a high proportion of fixed-price contracts and companies with high energy usage without the ability to pass on increased costs," it said.

Lehman noted that in India inflation would remain on the higher side for some more time due to the base effect -- which relates to the inflation data of the corresponding week in the previous year. Given particular prices in the current week, inflation would turn out to be higher, if it was a small number in the previous year, but would be less, if it was high a year ago. In addition, the report said that inflationary headwinds would lead to increased fiscal deficit and negatively impact the country's expansion plans. "One of the major reasons for India's premium expansion has been the reduction in fiscal deficit, a process which could be derailed in the short term due to inflationary headwinds," it added.

The government has initiated fiscal and monetary measures to lessen the effects of inflation on consumers. However, according to the report, some of these measures does not reflect the "true market economics." "If the inflation period is prolonged, we expect the government to start passing on some of the suppressed price increases (especially those relating to crude oil and fertilisers) in small doses. However, we do not expect this anytime soon, given the proximity of the elections, the report pointed out.

- economic times

Weakening Indian Rupee -and Reason behind it

It has been noticed that indian national rupee(INR) is weakening and it is also clear that US dollar is weakening too!! so why is INR weakening????

This question might be arising in every economist mind and they might not be sure why there is decline in value of indian rupee??

Indian economy grew at nearly 10% last fiscal year but the growth rate of indian economy projected for this fiscal year would never be met and finance minister has to rethink about the growth rate percentage which he kept in mind while making the Union finance budget for year 2008-09 in february this year.

Last year the foreign direct investments(FDI) in India crossed every target and was in huge amounts, US $ was flowing into indian subcontinent as water due to which US $ was wandering at under 40 INR mark till february 2008. this was the time when USA was considering india as a potential country . Since at that time US $ was coming to india itself so the reserve bank of India(RBI) stopped purchasing the US $ to keep $ buffer (every country keeps US $ into it's buffer for controlling the economic conditions of that particular country.


When US companies felt that there were few countries in Asia and Africa which offered better oppurtunities then india so the companies which had invested in india started to take out their money for investing in other countries due to this action of the US companies the US$ inflow into india started declining and Indian rupee started weakening.


Now RBi had to come into action and had to purchase US $ on it's own for maintaining the buffer level of US $ in Indian subcontinent but this action of RBI can never match to the rate when US $ were being invested in Indian subcontinent by US companies directly so the INR started weakening as the reserve US $ in RBI's buffer declined and rupee weakened further.


Now indian rupee can become strong only in case the investment from US companies start pouring into india again at the same rate at which it was in previous fiscal years. Moreover tremendous increase in crude oil prices are also weakening the india rupee further as the oil import bill by indian companies has increased almost 50% and all are incurring losses.


We should also be prepared for huge rise in petrol and diesel retail prices in future , the rise in petrol would have been in order of INR 10/litre for the government if government passed whole burden onto the general population and similar increase would be there in case of prices of diesel. and it is evident that inflation would also increase further in coming future.

So government has increased commision on filling stations by INR 29/Kilolitre for petrol and INR 31/Kilolitre for diesel however retail prices has increased by INR 0.04 / litre so people have been effected to less extent with rise in petrol/diesel prices . However crude oil prices will touch $200 /barrel mark in this year itself so further rise in petrol and diesel prices is on the cards and inflation will rise further in near future.

Crude Price on all time high

Global crude oil prices are on a all time high of US $ 125 per barrel and is adversly effecting the balance sheet of indian economy, probably it is also a reason of depreciating value of indian rupee when compared with US $ .

Crude prices could reach higher levels over the next few months as the winter season in the northern hemisphere gets under way.
Although the price of the basket of crude relevant for India is ruling at a much lower level than $55, the effect of higher crude prices is bound to affect the profitability of a swathe of companies, especially in the manufacturing sector, as costs of energy, fuel and transportation could start to spiral.

Even if the Government decides to limit the price increases by seeking recourse to further cuts in excise and customs duties, and requiring oil companies to bear an even greater part of the burden, profitability and growth rates could be affected as growth rate of the global and the Indian economy slows down. Market sentiment could also be influenced in a negative manner if liquidity in global markets dries up and a flight to safe assets and safer currencies set in.
Investors as such should consider adopting a cautious approach to buying equities, by staggering investments over a period of time, and partial profit booking on deep-in-the-money positions, may be appropriate. This could mitigate any downside risk that could envelop the markets due to the bullish trend in crude prices that is driven by a combination of robust demand and speculative activity.

The positive aspect of the crude prices story is the likely boom in construction activity in the Gulf countries. This could be an opportunity for companies such as Larsen & Toubro and Voltas, which have executed several projects in the region that could serve as a reference point for bagging more orders, and Gujarat Ambuja Cements, which appears well set to capitalise on the sharp spurt in cement prices in export markets.

The latter's earnings numbers for the July-September quarter have been buoyant with a fillip from exports as well as higher domestic prices, and there could be a further scaling up over the next few quarters. There are others that could benefit from the anticipated construction boom.
For now, we prefer the stocks of these companies, which have an established presence, higher efficiency levels that could compensate partially for rise in input costs and limited downside risks as large-cap stocks. Stock-specific recommendations of Business Line, however, will take precedence over this broad-investment strategy.
- Hindu Business line

Economy of India Growth Pattern - Latest Updates

It has been predicted that by 2035 there would be three major economies of world - US economy, Indian Rupee, Chinese Economy. and the growth rate of indian economy for makin this prediction correct has somewhat slowed down in this fiscal year due to global economic woes. Indian economy is a diversified economy with agriculture sector still the greatest job provider.

Indian INC's are making global impact and every second day we can listen news
about indian company's acqisition of some other company. Global Acquisitions by Indian companies are making the impact of indian economy on a global scale.

India's economy is on the fulcrum of an ever increasing growth curve. With positive indicators such as a stable 8-9 per cent annual growth, rising foreign exchange reserves, a booming capital market and a rapidly expanding FDI inflows, India has emerged as the second fastest growing major economy in the world.

The economy has been growing at an average growth rate of 8.8 per cent in the last four fiscal years (2003-04 to 2006-07), with the 2006-07 growth rate of 9.6 per cent being the highest in the last 18 years. Significantly, the industrial and service sectors have been contributing a major part of this growth, suggesting the structural transformation underway in the Indian economy.

For example, industrial and services sectors have logged in a 10.63 and 11.18 per cent growth rate in 2006-07 respectively, against 8.02 per and 11.01 cent in 2005-06. Similarly, manufacturing grew by 8.98 per cent and 12 per cent in 2005-06 and 2006-07 and transport, storage and communication recorded a growth of 14.65 and per cent 16.64 per cent, respectively.

Another significant feature of the growth process has been the consistently increasing savings and investment rate. While the gross saving rate as a proportion of GDP has increased from 23.5 per cent in 2001-02 to 34.8 per cent in 2006-07, the investment rate-reflected as the gross capital formation as a proportion of GDP-has increased from 22.8 per cent in 2001-02 to 35.9 per cent in 2006-07.

The growth pattern for this year has been robust with every sector's growth seen in green colour. some of the details about sectoral growth patterns is as follows :

The process continues in the current fiscal year. On the back of 9.9 per cent growth in the first half of 2006-07, GDP grew by 9.1 per cent during April-September 2007.

* While overall industrial production grew by 9 per cent during April-December 2007, importantly capital goods production rose by 20.2 per cent compared to 18.6 per cent during same period in 2006.
* Services grew by 10.5 per cent in April-September 2007, on the back of 11.6 per cent during the corresponding period in 2006-07.
* Manufacturing grew by 9.6 per cent during April-December 2007, on the back of 12.2 per cent growth during same period in 2006-07.
* Core infrastructure sector continued its growth rate recording 6 per cent growth in April-November 2007.
* While exports grew by 21.76 per cent during April-December 2007, imports increased by 25.97 per cent in the same period.
* Money Supply (M3) has grown by a robust 22.8 per cent growth (year-on-year) as of December 21, 2007 compared to 19.3 per cent last year.
* The annual inflation rate in terms of WPI was 3.5 per cent for the week ended December 29, 2007 as compared to 5.89 per cent a year ago.
* Fiscal and revenue deficit decreased by 11 per cent and 17.2 per cent, respectively, during April-November 2007-08 over corresponding period last year.

With such a robust growth rates, the advance estimates of the Central Statistical Organisation (CSO) expects the economy to grow by 8.7 per cent in 2007-08.

Highlights of Indian economy for present fiscal year are as follows :

Reflecting the favourable prospect of growth rate of Indian economy, the orders received Indian companies have increased by a whopping 68.6 per cent to US$ 32.48 billion during January-October 2007 compared to US$ 19.26 billion in the same period last year.

* India is among the five countries sharing 50 per cent of the world production (or GDP).
* FDI inflows have jumped by almost three times to US$ 15.7 billion in 2006-07 as against US$ 5.5 billion in 2005-06.
* The aggregate income of the top 500 companies rose by 28.4 per cent in 2006-07 to total US$ 469.51 billion.
* India's National Stock Exchange (NSE) ranks first in the stock futures and second in index futures trade in the world.
* Twenty Indian firms have made it to the list of Boston Consulting Group's 100 New Global Challenger Giants list.
* According to a study by the McKinsey Global Institute (MGI), India's consumer market will be the world's fifth largest (from twelfth) in the world by 2025.
* The number of companies incorporated has increased at an annual average of 55,000 companies in the last two years to 865,000, from 712,000 companies at the end of 2005.
* Four Indians and seven Indian microfinance companies make it to the Forbes list of Top10 world's wealthiest CEOs World's Top 50 Microfinance Institutions, respectively.
* India has the most number of private equity (PE) funds operating amongst the BRIC markets.
* Mumbai has been ranked tenth among the world's biggest centres of commerce in terms of the financial flow volumes by a survey compiled by MasterCard Worldwide.

Another significant aspect has been the broad-based nature of the growth process. While new economy industries like Information Technology and biotechnology have been growing around 30 per cent, significantly old economy sectors like steel have also been major contributors in the Indian growth process. For example, India has moved up two places to become the fifth largest steel producer in the world.

And with its manufacturing and service sectors on a searing growth path, Lehman Brothers Asia estimates India to grow by as much as 10 per cent every year in the next decade.

It is seen that the per capita income of india is on a rise the following report sums up the per capita income growth trends:

Along this significant acceleration in the growth rate of Indian economy, India's per capita income has increased at a rapid pace, exceeding an earlier forecast made by Goldman Sachs BRIC report which estimated India's per capita to touch US$ 800 by 2010 and US$ 1149 by 2015.

Per capita income has increased from US$ 460 in 2000-01 to almost double to US$ 797 by the end of 2006-07. In 2007-08, India's per capita income is estimated to be over US$ 825.07, according to the advance estimates of the Central Statistical Organisation (CSO). Further, India's per capita income is expected to increase to US$ 2000 by 2016-17 and US$ 4000 by 2025. This growth rate will, consequently, propel India into the middle-income category.

Global Acquisitions by indian firms puts India firmly on major economies

Tata Motors came into global limelight as an automobile major in early 2007 or even earlier when news of the cheapest world car was out of the tata's stable, Launch of tata nano (the $ 2500 car) turned all heds towards the tata motors and every major auto maker now want to replicate the same model but will never able to make a car even cheaper then the Tata's nano due to the cheapest input cost of nano, and the advantage with tata's is that they can use their own homemade steel for making the chasis of their vehicles which other companies have to purchase from other steel companies.
The launch of Tata Nano was much hyped so that the whole world notices the nano and Tata as a global automobile major with a surprise to come later in the year. the world never knew that the year 2007 was year of Tata Motors's brand acquisitions of the JAGUAR and LAND ROVER the iconic british car brands famous through out the world for their excellent cars in luxury car market.

Some still think that tats'a have played much bigger then they can by acquiring JAGUAR and ROVER car companies which were owned by the ford motor company of United states of America.

It may also be recalled that in 2007 the Toyota Motor Corporation surpassed General Motors to become World's number 1 automobile company. Now every car maker want to replicate the Toyota model to make their car company's revenue much larger and Tata's are no exception.

It took 3 decades for the japanese auto maker to enter into the luxury car market .

Toyota is the gold standard that aspiring auto-makers look to. Synonymous with Japanese quality, Toyota got to its premier position in the world auto stakes by a combination of production efficiency, high quality and delivering unsurpassed value to the customer. Toyota fans call a Honda, “a fake Toyota”, seemingly referring to Honda following in Toyota’s footprints and achieving similar status in terms of quality and value. Similarly while a growing company like Hyundai benchmarks its cars against Toyota competitors, a relatively “old-world” company like Volkswagen re-designed its production process based on inputs from Toyota engineers.

Still Toyota did not move beyond its economy and hence cheap image in the Western world till the introduction of its luxury brand, the Lexus. The strategy was such a success that other Japanese auto makers quickly jumped onto the bandwagon. The Lexus strategy had a curious side-effect on the overall Toyota bouquet of products. Unlike how the European companies built their luxury cars, Toyota continued to use the production line using strict quality control to drive efficiency. As a result the luxury cars did not cost significantly more than the regular line-up. While this revolutionized the luxury car market, it also worked wonders for its non-luxury line-up as the superior styling and finish of the luxury models began to rub-off on the rest of the portfolio.

Tata Motors has only taken baby steps towards becoming a global automaker. But the newly-acquired the availability of true luxury brands within the stable allows the company to learn what it takes to give its cars the aspirational value they need to succeed in the Western markets.

In addition to taking design lessons, Tata Motors can also benefit from the world-class R&D facilities, and an established global marketing network. Also while the Jaguar-Land Rover brand image will work wonders for Tata Motors’ own image, there is a danger that it would dilute the value of the British brands. So if the Tatas make it clear that they will treat the new companies as prized possessions that they will take pains to nourish and grow, while also using them as a huge opportunity to learn, then that should allay fears of brand dilution, while keeping the existing jobs and helping the Tatas as they build up their portfolio of vehicles to fill the gap between the SUVs and the luxury vehicles, in terms of both products and aspirational value.

So keep your fingers crossed and wait 2-3 years to see the technology of jaguar and rover brand embedded into indian made tata cars.