Massive allocation in social sector schemes in interim Budget Press Trust of India, India - Of the massive spending projected on social sector schemes that will have an impact on 'Aam Aadmi' (common man), the Bharat Nirman scheme gets Rs 40900 ... Interim Budget failed to bring cheer to eastern business houses Interim budget 2009 fails to satisfy India Inc Budget: The fiscal policy overview |
 PR-Inside.com (Pressemitteilung) | Interim Budget along expected lines: CII Business Standard, India - “CII is keen to see an increase in the funds flowing into infrastructure projects and the social sector. While the former will have a multiplier effect on ... CII Seeks Further Stimulus Packages To Boost India's Economic Growth Economy to slowdown further: CII |
 Hindu | Interim Budget speech 2009 Sify, India - ... lay the foundation for a vibrant delivery mechanism for many social sector schemes such as pension and National Rural Employment Guarantee Scheme (NREGS). Focus turns to economic growth prospects financial scene Economy Update Whither economic reforms? |
Extend tax holiday for IT-ITeS Sify, India - The IT/ITeS industry today constitutes an integral part of the Indian social-economic chain. The sector’s contribution to GDP has increased manifold, ... |
Over 1 million women demand access to life education Times of India, India - The partnership under Teach India with SEWA has resulted in building a bridge between educated professionals and poor informal sector households. ... |
 Rediff | UPA Govt. has acted on social sector policies: Patil Hindu, India - Patil took a broad sweep of the social sector programmes initiated in the last five years, including the National Rural Employment Guarantee Scheme (NREGS), ... Terror, security top concern: President What has the common man got? Patil asks, and answers Pratibha: wise policies helped to overcome disruptive events |
India's growth: World waits in anticipation Economic Times, India - And it cannot be emphasised enough that strategic planning must prioritise rural areas for infrastructure and social development. ... |
 Newstrack India | India Post gets 55% hike in outlay; 5000 POs to be networked Press Trust of India, India - New Delhi, Feb 16 (PTI) The postal sector has got a 55 per cent jump in the outlay for 2009-10 at Rs 620 crore to carry out all-round development and ... Full text of budget speech 2009-2010: Part-5 Aam admi gets more talk, less allocation |
India Inc. not satisfied, but hails high rural spending (Lead) Thaindian.com, Thailand - “The CII is keen to see an increase in the funds flowing into infrastructure projects and the social sector. While the former will have a multiplier effect ... |
A regular vote on account budget: Malvinder Mohan Singh Business Standard, India - Regular areas like agriculture, social sector, education - a little mention of heathcare there , defense, job creation were the areas of focus. ... |
Is this a pure VOTE on Account? Is the FM In charge Mukherjee Ethical enough to present a Full Budget named vote on account on the floor of Parliament which turned to be a PRE POLL BLUSTER though amusingly enough the Media, Electronic as well as Print showcasing so called Economists who are in fact the best agents of world bank and market forces focused and applauded the FM for going by books. NO POLL SOPs! It is quite funny the DESI ILLUMINATI India Incs, FICCI, CII, ASSOCHAM and SENSEX cry in the same language and hope BETTER just after the elections!
What an AMUSING COINCIDENCE to study typical India Political Economy, Real Politics and Strategical marketing altogether! The FDI Decision was taken before the Budget session began opening forward and backward windows and doors of Indian Economy, mind you!
The FM who did everything to promote the DESI ILLUMINATI with his Mass Destruction, deindustrialisation, disinvestment and Displacement ploy, the Chettiayar Chidambaram who along with RBI, SEBI and FINMIN bypassed Parliament and constitution all four years and pumped more than Rs SIX LAC THOUSAND into the Money machine, sat in Audience. The Washington planted Prime Minister holding the Finance Ministry is INDISPOSED. For him Montek singh Ahluwalia decides decisively on all financial affairs!But it is PRANAB well known for his capacity of Political as well as Economic jugglery is invoked from the sleep of FULL Twenty five years to present the HUMAN FACE of the Anti People Economic reforms for Mass destruction and Ethnic Cleansing so that the anti national IMPOSTORS ruling India may get the OPPORTUNITY to make up as SOCIALISTS! Agriculture has been dumped. And PRANAB emphasises on Agriculture ! What a MYSTERY! some James BOND or Sherlock Holmes should be called to understand the missing links! No?
Refraining from tinkering with tax and duty rates in the interim Budget, Acting Finance Minister Pranab Mukherjee on Monday made a huge allocation of Rs 30,100 crore to Government's flagship rural employment programme and many other schemes in a bid to counter the economic recession. Despite the fact that revised estimates for tax collections during 2008-09 is projected at Rs 627,949 crore as against the budget estimate of Rs 687,715 crore, the Minister resisted the temptation of giving sops since it is an interim budget with General Elections just a few months away. Mukherjee said the apex bank raised the interest rates to mop up excess liquidity to check high inflation that time, which in turn, had implications on the growth rate from both demand as well as supply side. This, along with easing global prices, led to a decline in the domestic prices with inflation rate falling to 4.4 per cent on January 31, 2009, he added.
Just understand, you have not got any TAX Relief as Common Man or employee, but Rs 65,300 Crore Loan has been written OFF. IMPORT EXPORT Duties relaxed!Who gets the waiver? I asked the question to my friends in the train who have to pay Income Tax, sales tax, Property tax, Municipality tax, VAT and Sales tax, Service tax and Professional tax and were analysing the Budget on the lines as the cluster of economists like ABHIRUP Sarkar and Dipankar Bhattacharya and Vimal Jalan nationwide guided them with a little help with the EVENING Budget specials published focused on SHINING INDIA!
Just for a Comic relief, I am sorry to present you a glimpse of the present day VOGUE! Kolkata`s SINGLE working professionals between 22 and 32 Will get a taste of the COOLEST thing hit the city ever. T2 SPEED DATING! Get READY! Be at your best! AXED! So that the girls should JUMP on you! SEXY Guies! Make sure to win over your VALENTINE in FIVE Minutes!
What happened ? Just try to understand! given the UNCERTAINTY over retaining jobs in most of the URBAN centres, CONSUMPTION SPENDING in the METROs is likely TARDY for some INDEFINITE time to come. It is clear as the American Recession has opened the FLOOD GATEs of JOBLOSS and RETRENCHMENT. DISINVESTMENT Strategy already decided and being IMPLEMENTED Phase by PHASE, PSU as well as GOVT. employees, may be Permanent, wait to be AXED any time. SAVINGS is the MOTTO in Urban centres. Hence the RURAL SECTOR has to be OPENED up for FUCKING with CONSENT! Americanisation and VISUAL as well as PRINT media have done EXCELLENT work to change the LIFE STYLE in Indian villages now affluent with Mobile Phones, Automobiles,cooking Gas, FREEZE, Computer, GM Seeds, Fertilisers, Pesticides, Cyber Cafes, Bars and so on. Hence, the best BET remains the RURAL SECTOR where the MARKET Orientation and Business may be diverted to get out of whatsoever RECESSION in Indian ILLUMINATI! Right to Education has done an EXCELLENT job for qualitative change in consumer Culture in rural areas as the GENERATION NEXT is always DEMANDING Irrespective of purchasing power of the Parents now. Social sectors should be opened up. Mind you, the so called social sector or public services have been either PRIVATISED or RUN by NGOs or PARTY GESTAPO! Pranab has done the work with SURGICAL precision and it happens to be the ESCALATION of RETAIL CHAIN in rural areas! you may not enter in rural areas if you do not pose friendly ENOUGH. Hence, Agriculture gets the TOPMOST Priority after so long a period and farmers` Contribution to GDP is accepted quite ABRUPTLY in the age of Information Explosion, REALTY BLITZ, Infrastructure! It was a simple task very hard to work out. PRANAB made it EASY with his EXPERIENCE of Socialist Coaching gained under no one else than Mrs Indira Gandhi! Coincidentally, the ENVIRONMENT favours the ACTING Finance Minister who would be remembered to present a budget after twenty five years being OUT of the FINMIN and ECONOMIC AFFAIRS in fact! SUCCESSFUL MONSOON for last two seasons have left MANY PEOPLE in Rural areas with DISPOSABLE MONEY. That MONEY has to be TRANSFERRED to India Incs, MNCs, Realty Magnets, builders and promoters!
Pranab has ALLOCATED Rs HUNDRED CRORE for National Identity Cards. It means persecution of Bengali Speaking people out of Bengal, specially the partition Victim Resettled Bengali SC refugees. Deportation drive has to be CONTINUED. it is the same PRANAB who along with Buddha and Adwani played key role to change and modify citizenship Act to benefit NRIs and India Incs PERSECUTING and DEPORTING Genuine Indian citizens living in India generation after generation!
Pranab have allocated RS FIFTY FOUR CRORE to deal with TERROR. The war against Terror continues as continues Persecution and ETHNIC Cleansing of the Minorities in association with CIA and MOSSED!
The BUDGET speech did not mention JOBLOSS and RETRENCHMENT Unprecedented. Twenty Three Lacs people lost jobs and within three months ten lac more are destined to lose jobs. Not to mention the displacement and Ejection and annihilation of the Indigenous aboriginal people from land, home,livelihood and life! if we include IMMINENT DISINVESTMENT in PSUS and GOVT sectors like Bank, OIL, SAIL, Coal India, Rly, Ongc, LIC and POST OFFICE to showcase the ACTUAL position of ECONOMIC reforms by the Ruling Hegemony with Marxists Support, the HUMAN Face Presented by the KAYSATHA BRAHMIN ICON of Bengal would look like the MOST UGLY Face presented ever by any BOLLYWOOD film!
The Prime Minister has already assured a TWENTY BILLION Bailout Package but the Nation could not have a GLIMPSE of the so called EFFICIENT and COMPETITIVE PRIVATE SECTOR Balance SHEET despite the INFLATED SATYAM ASTAYAM episode!
Crisis of CONFIDENCE is being described as CONFIDENCE! What a TOILET TRY!
The FM acting dealt with MAL NUTRITION but he evaded FOOD Insecurity and Starvation, Suicides and Graveyards in the Industrial belts, TEA, COTTON, Heavy Engineering, Jute and so on. No SOCIAL SECURITY planned.
NO JOB MOBILISATION! Though SIXTEEN IITs have to be opened to APPEASE the Privileged Class!
No FISCAL RESPONSIBILITY!
No ATTEMPT to ADDRESS the SITUATION Head ON!
Hence, the budget remains nothing but VOTE Bank Mobilisation and Demographic readjustment!
The STATISTICAL Jugglery has put on FALSE GDP, false Revenue deficit and false FISCAL deficit. Balance of payment is not Clarified at all!
What an OPPORTUNITY LOST!
Thanks god! Indian Voters have such a SHORT memory! Moreover the GLOBAL ZIONIST Order, so called opposition including the most Hypocrite Marxists, Gandhian carbides and Socialist oxides, Desi and Foreign ILLUMINATI Zionist,Mossed, CIA and World Bank along with pentagon Stand ROCK SOLID behind the KILLERS and they have got the INFINITE LICENSE to KILL!
Belying expectations of a rally, the benchmark Sensex on the Bombay Stock Exchange nosedived by over 320 points as the interim Budget, which was widely anticipated to announce stimulating measures for the industry, turned out to be a damp squib.With investors exercising caution, the markets had a weak opening before the presentation of interim Budget by Finance Minister Pranab Mukherjee at 1100 hours in Parliament.
The BSE barometer went on to post further losses with investors offloading as the finance minister pegged the fiscal deficit at six per cent in the next fiscal.
The BSE barometer finally closed the day at 9305.45 points, lower by 329.29 points, the biggest drop since Feb 2.
Realty stocks, which surged in early trade on anticipation of emphasis on real estate and hospitality sectors in the interim Budget, ended the day with heavy losses and the sectoral index dipped by a sharp 4.58 per cent, while all the other sectoral indices also closed in the red.
The Nifty on NSE also fell by 99.85 points at 2,848.50.
Market heaviest RIL led the fall and closed lower by 3.42 per cent. Blue-chip ICICI Bank was another big loser at 5.79 per cent. Jaiprakash Associates at 7.88 per cent and Reliance Infra at 6.35 per cent were the other major losers among the elite Sensex club.
India Inc on Monday gave a thumbs down to the interim budget 2009-10, proposed by Finance Minister Pranab Mukherjee, saying it is a non-event and more of a political statement.
"It was completely (a) non-event. It was (more a) political statement than (an) interim budget. There was nothing for any sector, forget about real estate," Parsvnath Developers Chairman Pradeep Jain said.
Expressing similar sentiments, Kotak Mahindra Bank Managing Director Uday Kotak said, "Acting finance minister Pranab Mukherjee has stuck to what is good convention."
TCS ED and CFO S Mahalingam said there were two stimulus packages given in the past couple of months and they were going to stay as they were. "I am disappointed," he added.
Stating that the government did not have much of a choice, Hinduja Group CFO Prabal Banerjee said: "They did what they could best do."
In view of the fact that security environment has deteriorated considerably with the Mumbai terror attacks giving an entirely new dimension to cross-border terrorism, the Budget increased the allocation for defence to Rs 141,703 crore including Rs 54,824 crore capital expenditure.
Aiming at enhancing expenditure on schemes to provide employment and lift the economy, the interim Budget for 2009-10 has planned a total expenditure of Rs 953,231 crore comprising Rs 285,149 crore in plan and Rs 668,082 crore in non-plan spending.
To counter the negative impact on exports due to the global economic crisis, the interest subvention of two per cent on pre and post shipment for certain employment sectors is proposed to be extended Like the NREGS, the Bharat Nirman scheme gets a massive injection of Rs 40,900 crore in the coming year.
"In the current environment, there is a clear need for contra-cyclical policy and it calls for a substantial increase in expenditure in infrastructure development where we have a large gap and in rural development where the programmes such as Bharat Nirman and NREGS are playing a vital social role," Mukherjee said.
He said since the scope for revenue mobalisation is bound to be limited in a period of economic slowdown, any increase in plan expenditure will increase the fiscal deficit.
"Indeed, we may have to consider, the additional plan expenditure from 0.5 per cent to 1 per cent of GDP and gear up our systems accordingly," Mukherjee, who holds the additional charge of Finance, said in his 90-minute speech.
In the Budget estimates for 2009-10, the Sarva Siksha Abhiyan has been given Rs 13,100 crore more while the Mid-day Meal Scheme will get Rs 8,000 crore, the Integrated Child Development Scheme Rs 6,705 crore and the Jawaharlal Nehru
Urban Renewal Mission will get an additional Rs 11,842 crore.
Among other schemes that got increased allocation are Rajiv Gandhi Rural Drinking Water Mission (Rs 7,400 crore), Total Rural Sanitation Programme (Rs 1,200 crore) and National Rural Health Mission (Rs 12,070 crore).
To ensure continuity in financing of rural infrastructure projects, the Minister proposed RIDF-15 with a corpus of Rs 14,000 crore and continuation of the window for rural roads with a corpus of Rs 4,000 crore. Mukherjee said the proposed provisions are appropriate for a vote-on-account but he pointed out that planned expenditure for 2009-10 will have to be increased substantially at the time the presentation of the regular Budget, if the economy has to be given a stimulus it needs to cope with the global recession that is likely to continue through the year.
The Budget makes a provision of Rs 95,579 crore for major subsidies including food, fertiliser and petroleum.
For the coming year, gross tax revenue receipts at the existing rates of taxation are estimated at Rs 671,293 crore, of which the Centre's net receipts have been projected at Rs 500,096 crore.
With revenue expenditure estimated at Rs 848,085 crore, the revenue deficit amounts to 4 per cent of the GDP. Fiscal deficit is estimated at Rs 332,835 crore which is 5.5 per cent of the GDP.
This would be lower than in 2008-09 but higher than would be appropriate under normal circumstances, he said.
"However, conditions in the year ahead are not likely to be normal and therefore the high fiscal deficit is inevitable. We will return to FRBM targets once the economy is restored to the recent trend growth path," he said.
Mukherjee said extraordinary economic circumstances merit extraordinary measures. "Now is the time for such measures. Our government decided to relax the FRBM targets, in order to provide much needed demand boost to counter the situation created by global financial meltdown.
"Indeed, depending on the response of the domestic economy and the revival of the global economy, there may be a need to consider additional fiscal measures when the regular budget is presented by the new government after the elections. However, the medium term objective should be to revert to the path of fiscal consolidation at the earliest," he said.
Touching on the revised estimates for 2008-09, he said the total expenditure has been revised to Rs 900,953 crore against Rs 750,884 crore, an increase of Rs 150,069 crore.
The plan expenditure for 2008-09 was placed at Rs 243,386 crore in the Budget estimate which has now gone up to Rs 282,957 crore in the revised estimates.
The additional plan spending of Rs 39,571 crore is on account of increase in the central plan by Rs 24,174 crore and an increase of Rs 15,397 crore in central assistance to state and UT plans.
On the non-plan side, the additional Rs 110,498 crore in the revised estimate is accounted for by an increase in expenditure of Rs 48,863 crore on fertiliser subsidy, Rs 10,960 crore on food subsidy, Rs 15,000 crore on agriculture debt waiver, Rs 7,605 crore on pensions and Rs 5,149 crore on police. An additional amount of Rs 9,000 crore has also been provided for in defence expenditure. In keeping with the recent trend, the actual tax collections during 2007-08 exceeded the revised estimate for the year both for direct and indirect taxes.
However, for 2008-09, the revised estimate for tax collection is projected at Rs 627,949 crore as against Budget estimate of Rs 687,715 crore.
This shortfall is primarily on account of government's proactive fiscal measures to counter the impact of global economic slowdown on the Indian economy, Mukherjee said.
A substantial relief of about Rs 40,000 crore has been extended through tax cuts, including a fairly steep across-the-board reduction in central excise rates in December last. Despite this, it is expected that the tax collections will exceed last year's collection.
Taking into account the variations in receipts and expenditure, the current year expected to end with a revenue deficit of Rs 241,273 crore as against Budgeted figure of Rs 55,184 crore.
Accordingly, the revised revenue deficit stands at 4.4 per cent of GDP instead of 1 per cent in the Budget estimates.
Similarly, the fiscal deficit of 2008-09 has gone up from Rs 133,287 crore in the Budget estimate to Rs 326,515 crore in the revised estimates.
"I can't indulge in reckless borrowing...," he said after presenting the interim budget for FY'10 in Parliament.
The government has pegged fiscal deficit at 5.5 per cent of Gross Domestic Product for the next financial year, against the revised figure of 6 per cent in the current financial year.
The fiscal deficit target for the current fiscal was 2.5 per cent.
However, fiscal measures initiated in the wake of the global economic downturn and reduction in revenue collection have impacted resource mobilisation resulting in widening ofdeficit.
Analysts too fear that returning to an era of high fiscal deficit could push the country into the vicious cycle of high inflation.
Highlights of the interim budget 2009-10
The following are the highlights of the interim budget for 2009-10 presented in Parliament by Finance Minister Pranab Mukherjee on Monday.
* Total expenditure estimated at Rs 9,53,231 crore
* Plan expenditure estimated at Rs 2,85,149 crore.
* Non-Plan expenditure pegged at Rs 6,68,082 crore.
* Revenue expenditure at Rs 8,48,085 crore.
* Centre's net tax revenue pegged at Rs 5,00,096 crore.
* Revenue deficit 4 per cent of GDP.
* Fiscal deficit at 5.5 per cent of GDP.
* Major subsidies estimated at Rs 95,579 crore.
* Two per cent interest subsidy for exports extended till
Sept for employment oriented sector.
* Defence allocation at Rs 1,41,703 crore.
* Rs 30,100 crore allocated for rural employment scheme.
* Bharat Nirman allocated Rs 40,900 crore.
* Rs 12,070 crore for National Rural Health Mission.
* Rural drinking programme allocated Rs 7,400 crore.
* Rural sanitation programme gets Rs 1,200 crore.
* Rs 14,000 crore for rural infrastructure development.
* Mid-day Meal scheme allocated Rs 8,000 crore.
* Rs 6,705 crore for Integrated Child Development Scheme.
* Sarva Sikhsha Abhiyan allocated Rs 13,100 crore.
* Urban renewal mission gets Rs 11,842 crore.
New Delhi (PTI): Terming the Interim Budget as "people's budget", Prime Minister Manmohan Singh on Monday said it showed that aam admi has been centre of the UPA government's planning process.
"The interim is a fine balancing act between the need to restore economy to its optimum growth path and the Constitutional constraints of a pre-election budget," he said in a statement.
Singh, who watched the presentation of the budget by Finance Minister Pranab Mukherjee on television, said he had no doubt that the continued stimulus for various flagship programmes of the government would provide relief to all sections — especially the aam admi.
The Prime Minister said since the UPA government took over, "aam aadmi has been the centre of our planning process. This focus continues and the interim budget clearly indicates the next steps".
Singh, who is recuperating after a cardiac bypass surgery, said "it continues to be a people's budget."
Complimenting Mukherjee for his "effective response to a difficult economic situation", Singh said the benefits of the stimulus for industry and the export sector announced earlier continued to be available.
"Our stress on increasing the investment on infrastructure and employment generation has been clearly underlined. All this will result in positive turn around in economic activity and levels of confidence," he added.
Finance Minister Pranab Mukherjee said there is no room to be complacent about inflation even though the rate of price rise has fallen to 4.39 per cent now, against the peak of around 13 per cent in August 2008.
"We have weathered the crisis, but there is no room for complacency," Mukherjee said in his interim budget speech.
Inflation declined by 0.68 percentage points during the week ending January 31 to 4.39 per cent from 5.07 per cent a week ago. It stood at 4.74 per cent in the year-ago period.
Mukherjee said inflation had shot up nearly 13 per cent in the first week of August 2008.
The Right to Information Act has brought about greater accountability among public servants, Finance Minister Pranab Mukherjee said on Presenting the Interim Budget in Lok Sabha, he said the enactment of the Act by the Centre and many states has "bridged a critical gap in the public decision-making process and ushered in greater accountability of public servants." He said the Second Administrative Reforms Commission had brought out a number of reports with "practical recommendations, providing a starting point for improving efficiency in the delivery of public services." The Commission was set up in August 2005 with a mandate to suggest measures to achieve "a pro-active, responsive, accountable, sustainable and efficient administration for the country at all levels of the government," Mukherjee said. | |
Gains in the dollar against major units overseas also prompted banks to buy the U.S. unit.
The partially convertible rupee closed at 48.84/85 per dollar, 0.4 percent weaker than 48.67/68 at close on Friday.
"There was nothing positive for the rupee in the budget and since the stock market reacted negatively, that is likely the reason for fall in rupee," said V. Kumar, chief dealer with State Bank of Travancore.
"The pressure is on the downside for rupee," he said, adding the local unit could drop towards 52 per dollar levels.
Shares fell 3.4 percent, the biggest drop in two weeks, after finance minister Pranab Mukherjee delivered a budget containing little in the way of new stimulus for an economy expected to slow to a six-year low this fiscal.
Foreign fund outflows from stocks were a key factor for the rupee's fall in 2008. Foreigners have already withdrawn about $967 million from Indian shares this year, after selling more than $13 billion last year.
In the budget the government projected spending may have to jump later this year to shield the economy from the global slump and stem job losses, fueling fears of a spiralling fiscal deficit that is headed for a seven-year high. .
Dealers were also watching the dollar's performance overseas for cues. The dollar index, a gauge of the U.S. unit's performance against majors, was up 0.2 percent, hurting rupee sentiment.
The dollar hit a two-month high on a trade-weighed basis on Monday as global recession fears encouraged buying of safer assets, while the yen rose versus the euro as a G7 meeting omitted mention of the currency's strength.
NEW DELHI: The combined turnover of the central public sector enterprises (CPSEs) has gone up 84% to Rs.10.81 trillion (Rs.10,81,000 crore) last
Presenting the interim budget for 2009-10 in the Lok Sabha on behalf of Prime Minister Manmohan Singh who is recuperating from heart bypass surgery, Mukherjee said combined profit of the CPSEs has increased 72% from Rs.530 billion to Rs.910 billion.
The public sector companies' contribution to the central exchequer by way of dividend, interest and taxes and duties went up 86%.
The minister added that the number of loss making enterprises has come down from 73 in 2003-04 to 55 in 2007-08, while the number of profit making enterprises has gone up from 143 to 158.
Mukherjee said the government set up the National Investment Fund in November 2007 to finance select social sector schemes.
The proceeds made by disinvesting government stakes in public companies were deposited in the fund.
"The residual 25% annual income of the fund will be used to meet the capital investment requirements of profitable and revivable CPSEs," Mukherjee added.
Insurance out of new FDI policy; no specific bar on retail
The new FDI policy excluding indirect foreign stake from the sectoral caps will not be applicable to the insurance sector, while the
For the present, the new guidelines will not be applicable to the insurance sector, the Department of Industrial Policy and Promotion said.
Though Commerce and Industry Kamal Nath said the amendments in the guidelines did not open the gates for the likes of the Wal-Mart into multi-brand retail, officials admit the revised policy can enable FDI into the politically sensitive sector.
When asked whether the new policy allows back door entry for FDI in retail, Nath said, "No, they cannot".
However, officials, not to be named, said it is possible since foreign investment in a firm "owned and controlled" by an Indian will be treated as domestic money. For definition of the ownership and control, the largest Indian shareholder will have to own 51 per cent equity in I&B and defence sector.
Thus, as long as the likes of Wal-Mart do not have "ownership and control" of an Indian firm which gets into the business of multi-brand retailing, there is no bar on the foreign players, sources said.
CBI to probe Satyam fraud, senior VP told to quit
Andhra Pradesh Home Minister K Jana Reddy said the state has issued a 'Government Order' handing over the probe into the Satyam Computers fraud to the Central Bureau of Investigation. The order was issued on February 13, he added.
Separately, Union Corporate Affairs Minister Prem Chand Gupta told PTI in New Delhi that the case would be now jointly probed by the CBI, along with the SFIO and other agencies.
"Now, the case will be probed jointly by the CBI, SFIO, I-T department and others," Gupta said.
The country's biggest ever corporate scam, currently being probed by the Serious Fraud Investigation Office (SFIO) in Hyderabad, is expected to be discussed in the Rajya Sabha tomorrow, Gupta added.
Earlier, Chief Minister Y S Rajasekhara Reddy had written two letters to Prime Minister Manmohan Singh proposing that the CBI take over the investigation into the Satyam fraud in view of the multi-faced nature of the issue.
The scandal is currently being probed by the CB-CID of Andhra Pradesh police also.
Satyam asks senior VP to quit
Satyam Computer Services asked its senior vice-president of banking and financial services vertical Anil Kumar to quit immediately.
"To drive economic activity, the government needs to expedite spending of allocated funds for IT projects to stimulate the domestic market," the Nasscom said in a statement.
Lauding the government for focusing on infrastructure and education, the IT trade forum said it was heartening to see the benefits accruing from state-run projects like 'Project Arrow'.
The Project Arrow was launched in May 2008 to revitalise the postal department and develop it into a brand for millions of its customers across the country.
The project is under implementation, which will cover 50 post offices in the first phase, 450 in the second and 4,500 in the third all over the country.
Though the IT industry did not expect major announcements from the vote-on-account budget, the Nasscom said it would engage with the new government on specific policy initiatives to sustain the industry's growth.
"In the interim, there is need for urgently removing the inequities and multiplicities of taxes and procedural issues even before the new government comes in," the statement noted.
The Nasscom also wanted the government to free up the bandwidth of companies from these issues so as to enable them to better manage the downturn and focus on business.
"This is also important to ensure India remains a preferred partner to do business in the domestic and overseas markets," the statement added.
Economic Affairs Secretary Ashok Chawla said converting intervention bonds into regular government bonds could be one option to raise additional funds. He ruled out a private placement of debt with the central bank.
In its budget for 2009/10 unveiled on Monday, the government said its gross market borrowing for the current fiscal year ending on March 31 would be 3.06 trillion rupees, above total announced borrowings of 2.61 trillion rupees which included 460 billion of bonds sales announced just last week.
"We are in consultation with the RBI. We will notify the manner in which that will be raised," Chawla said.
"But it will not be market borrowings, because we realise that there is the problem of how much the market can contribute and how much space should be available to others," he said.
Chawla also ruled out privately placing government bonds with the central bank to raise the additional funds needed.
"Private placement is not envisaged under the FRBM (Fiscal Responsibility and Budget Management Act). We don't wish to violate that," he said.
In the interim budget, the government said its fiscal deficit would widen to 6 percent of gross domestic product in 2008/09, compared with its initial estimate a year ago of 2.5 percent.
Market Stabilisation Scheme (MSS) bonds are used to absorb inflation-fuelling surplus cash in the banking system generated via the central bank's intervention in the foreign exchange market in the wake of strong capital inflows.
But foreign flows have slowed, and turned negative for equities, and the central bank has recently bought back MSS bonds ahead of their maturity to add to market liquidity and underpin demand for regular government bond auctions.
The government pays interest on outstanding MSS bonds but does not use the funds raised for spending.
There are 1.05 trillion rupees of MSS debt outstanding, including treasury bills.
Laying the foundation stone for a Rs 500 crore IT park at Purakad in Ambalapuzha in the district, he said the government was according top priority for development of the IT sector in the state. The aim was to generate five lakh jobs in the next five years, he said.
The IT park, to come up in about 100 acres of land, was part of the government initiative to promote such parks in all districts in the state, he said
Work on the Smart City IT Park in Kochi would be started after removing all hurdles, he added.
This is the part of $4.2 billion (about Rs 20,160 crore) additional fund that India is seeking over and above the permissible annual grant to the country.
"We have sought additional World Bank funding over and above what is normally admissible every year additional to the extent of $4.2 billion. Of that $3 billion has been sought for the recapitalisation of the banks over the period of about two years," Department of Economic Affairs Secretary Ashok Chawala said in a post interim-budget conference.
The process is currently in the pipeline and appropriate provision and inclusion would be made in the Budget statement as we go along during the year," he said.
In his interim-budget speech during the day Finance Minister Pranab Mukherjee said "government would recapitalise the public sector banks over the next two years to enable them to maintain Capital to Risk Weighted Assets Ratio (CRAR) of 12 per cent to ensure credit growth continues to sustain economic growth."
Fertiliser sop bill: Rs102k cr
An additional Rs 12,000 crore spend is estimated. This is despite the steep drop in the global prices of fertiliser inputs and raw materials between October 2008 and early 2009.
"It is estimated that an additional Rs 12,000 crore subsidy spend will be incurred over and above what is already spent," fertilisers and chemicals minister Ram Vilas Paswan told Parliament here on Friday, even as global prices refused to come down to the pre-peak 2007 levels.
Ironically, those persistently high prices may themselves be dictated by India, among the biggest fertiliser shoppers in the global market. The level of global prices in fact drove domestic fertiliser production into the negative for the first nine months of the year, affecting availability and necessitating increasing imports and creating an upward pressure on international prices of fert commodities.
According to the DoF, compared to about 4.7 mt of urea imported in ’07-08, imports are already to the tune of 5.7 mt in ’08-09. More imports are expected before March, bringing up the level of imports to around 6-6.5 mt of urea, 6 mt of diammonium phosphate (DAP) and 5 mt of muriate of potash (MoP).
Ironically, in last December, the government had estimated a subsidy bill of slightly lower than Rs 1, 10,000 crore over an earlier projected amount of Rs 1, 20,000 crore. Based on January 2008 prices, in fact, the DoF had estimated even earlier that the subsidy bill would mount to a massive Rs 65,000 crore for this fiscal.
Despite that, budgetary provisions for the year, were only a paltry Rs 31,000 crore, just Rs 486 crore more than the revised allocation for 2007-08. That allocated amount, in fact, was enough to ensure supplies only up to June 2008.
However, while the drop of around Rs 10,000 crore in subsidy estimates (down from a higher Rs 1,20,000 crore-odd) was primarily on account of lower global prices for inputs and raw materials in the last few weeks, DoF officials maintained that a fast-depreciating rupee against the dollar blocked any further cut in the subsidy bill.
There is still a big plus side to the massive subsidy bill, however. The falling price of crude oil. And this hit multi year lows today at only $ 35-odd per barrel. "The upside on the projected saving on the subsidy bill is that if crude oil prices had continued rising through August, September and October, this fiscal's subsidy spend could have been much higher, at Rs 1,50,000 crore," an official said.
Here's an indication of how the fall in global prices impacted the fertilsier subsidy bill footed by the government. In the two months between mid-August and mid-October 2008 alone, the global price of sulphur, a key input, nosedived from a phenomenal price of around $850/tonne to only $65/tonne by year end.
Global urea price, meanwhile, shed a price flab of nearly 30% in the three months up to mid October 2008, and reigned at around $250/tonne f.o.b. in December. In addition to about $50/tonne for freight, that brought up the price of urea in December to about $280/300/tonne from a significantly higher $450/tonne earlier.
In addition, the forced shutdown leading to a loss of production and energy efficiency thanks to the oil PSU strike in January 2009 alone added around Rs 100 crore.
CIA helped India, Pak share 26/11 intelligence: Report
Washington America's Central Intelligence Agency (CIA) has played a crucial role in India and Pakistan sharing secret intelligence information on Mumbai terrorist attacks, a media report claimed on Monday.
In a front page article, The Washington Post said CIA "orchestrated back-channel intelligence exchanges" between India and Pakistan with the top American intelligence agency itself playing the role of a neutral arbitrator.
"The exchanges, which began days after the deadly assault in late November, gradually helped the two sides overcome mutual suspicions and paved the way for Islamabad's announcement last week acknowledging that some of the planning for the attack had occurred on Pakistani soil, The Post quoted sources as saying.
On November 26 last year, 183 people, including American nationals, were shot dead by Pakistani terrorists who entered Mumbai through sea. Only one of the Pakistani terrorists involved in the attack was captured by the Indian security forces and is in the custody of Mumbai police.
Referring to interviews with sources in the US and foreign government, the newspaper said the intelligence went well beyond the public revelations about the ten Mumbai terrorists, and included sophisticated communications intercepts and an array of physical evidence detailing how the gunmen and their supporters planned and executed their three-day killing spree in Mumbai.
"Indian and Pakistani intelligence agencies separately shared their findings with the CIA, which relayed the details while also vetting the intelligence and filling in blanks with gleanings from its networks," the Post quoted sources as saying.
"The US role was described in interviews with Pakistani officials and confirmed by US sources with detailed knowledge of the arrangement. The arrangement is ongoing, and it is unknown whether it will continue after the Mumbai case is settled," the newspaper said.
The Post article is a revelation as so far only the role of FBI in the Mumbai investigation was known.
Terming the sharing of intelligence information between the two South Asian neighbours as unparallel, The Post said this signalled a thawing of tensions between the two countries.
"India shared evidence bilaterally, but that's not what cinched it," a senior Pakistani official familiar with the exchanges was quoted as saying. "It was the details, shared between intelligence agencies, with the CIA serving mainly as a bridge," the official said.
Goldman Sachs has forecast the cumulative deficit to fall marginally to 10 percent of GDP in the next financial year, mostly due to a falling subsidy bill; but said that federal deficit may increase to 6.5 percent, from 6.1 percent in the current fiscal.
Information through website not enough under RTI
Krishnadas Rajagopal
Posted: Feb 16, 2009 at 1352 hrs ISTNew Delhi Posting information on government websites may not be enough under the Right to Information (RTI) Act. The Central Information Commission has directed public authorities to make available printed or CD copies of information to RTI applicants even if the same data is available online.
“All applicants may not have access to websites. Whereas it is helpful to give information on the website, the Public Information Officer (PIO) must always offer to give the same on a CD or hard copies,” Information Commissioner Shailesh Gandhi said.
The Bench was deciding an appeal filed by Chandigarh resident Harish Kochhar against the Central Board of Secondary Education (CBSE), which repeatedly referred him to its official website in answer to his RTI queries.
To his first question on whether the CBSE maintained a list of records “essentially submitted to CBSE by affiliated schools on a yearly basis”, the PIO merely stated that schools concerned follow the rules of the Board and directed Kochhar to the education body's websites www.cbseaff.nic.in and www.cbse.nic.in.
The Board gave the same pattern of answers to the next eight questions, mostly confining itself to a one-liner “as above Question no. 1”.
Worried over the rising fiscal deficit, market watchers are not ruling out a downgrade by rating agencies.
Standard and Poor's is already said to be planning a review India's domestic debt rating after the government's interim budget on Monday forecast increased borrowing and a higher fiscal deficit.
Said Saurabh Nanavati, CEO, Religare AMC: “The interim budget has turned out to be a dampener for the market, which was expecting industry sops and lesser fiscal estimates. In case of any further fall in indirect and direct revenue collections by the government, I expect the combined fiscal deficit at around 9 per cent by the end of March 2010. The compounding fiscal situation may force rating agencies to downgrade India.”
Poor corporate performance is seen as the main reason for low revenue collections by the government. “In order to push up their topline, companies are bound to take hits in their bottom line. This results in lower payment of direct and indirect taxes,” pointed out Waqar Naqvi, chief executive, Taurus Mutual Fund.
Ravi Sankar, banking analyst at Antique Broking, said, “the downward risk to GDP estimates will increase chances of fiscal deficit ending up to be more than 6 per cent by the end of FY 2009. Hence, chances of re-assessing India’s situation by rating agencies are high.”
Interim Budget failed to bring cheer to eastern business houses
"There is nothing in it insofar as I am concerned, " said Mr Gaurav Swarup of Paharpur Cooling Towers. Mr S K Roy of Peerless General Finance & Investment Company Limited did not even attempt a response. "I had no expectations on the policy or tax front from this budget, since a vote on account is a routine exercise," Aditya Khaitan of McLeod Russel (India) Limited said.
Comparatively better was Mr Sanjiv Goenka of RPG Group. "I don't think the acting finance minister Mr Pranab Mukherjee or the UPA government missed out on an opportunity by not announcing fresh stimulus measures. After all, in a vote on account, industry cannot harbour expectations on fresh policy announcements. It is not that the government is not sending stimulus signals to industry. ..last week's relaxation of FDI norms is a case in point. As the government slips into election mode, industry should expect a decline in the number of fresh policy measures," he said.
Mr Harshavardhan Neotia of Ambuja Realty group was frank about the fact that Monday's budgetary exercise did not have much to talk about. "The initial part of Mr Mukherjee's speech was predictably a report card of the UPA government's achievements for the past four years. The fact that both fiscal deficit and revenue deficit are projected to shoot up is a direct fall out of the global meltdown. While in the past, the interim budget has been used as a populist platform, I personally am not clear on the legality of the interim budget's boundaries.
Mr Mukherjee, as one of the senior most ministers in the UPA government, is obviously conversant on the legalities and the propriety issue which would perhaps have influenced the decision to keep it pretty neutral. It is not that the government has not been initiating measures to counter the slowdown. The recent FDI initiative and the earlier measures announced by the RBI as cases in point."
Sanjay Budhia of Patton Group said: "Continued emphasis on infrastructure is a step in the right direction. It will yield long term results in terms of growth and employment in core sectors like steel and cement, for instance. Such investment in infrastructure is welcome and so is the thrust on social sector, especially on education. But the exporters' community has been left disappointed.
Against an average of 26% growth in last four years, the sector witnessed negative growth in December 2008 with prospects looking dim in the near term. The government has not announced any stimulus for them. Even engineering exports has not been given any incentive like enhancement of DEPB or through duty drawback scheme. Given our high logistics costs, a marginal interest rate cut for some sectors is unlikely to provide much succour."
Bengal Chamber of Commerce & Industry said the interim budget did not contain any special stimulus packages or any special proposals on direct and indirect taxes and to that extent it could be viewed as a non event at this juncture.
Steel, cement cos may witness surge in demand
"The two major inputs that go into almost every infrastructure project are cement and steel and Bharat Nirman is all about providing infrastructure facilities to the common masses. Work on new steel projects, which were held back because of slowdown in demand, will be expedited with the increase in construction work," said JSW Steel executive director (commercial) Vinod Naval.
However, the cement and steel makers put a caveat to this expectation: work on projects under the scheme should commence in time. Said Jindal Steel and Power director Sushil Maroo, "The impact of allocation of Rs 40,000 crore towards Bharat Nirman would be known only once projects are on the ground. As of now, it's more of a psychological demand booster. Demand for long products have already started moving upwards with the rise in construction activities."
Ispat Industries managing director Vinod Mittal said, "The economy is passing through extraordinary times and so the steel industry was expecting more from of the interim budget. Globally, countries have already announced huge stimulus packages to save employment and revive demand. The budget was a good opportunity for the Indian government to announce initiatives in this direction."
Commencement of work on infrastructure projects would mainly increase the demand for long steel products such as TMT bars and structurals. Long steel products constitute about 60% of the country's total steel production. In the last few months, the government has taken few steps to safeguard the domestic industry from cheap imports and increase consumption of domestic production. Steel products attract 5% import duty.
A L Kapur, managing director of Ambuja Cements, told ET that the 261% increase in fund allocation will provide a fillip to the demand for cement. The announcement has come at an opportune time when the major players are implementing expansion. As the incremental capacities come to fruition gradually during the year, the additional produce may take care of the new demand to be created from the Bharat Nirman scheme, he added.
"It's a positive interim budget but the big question is whether the new government will retain the same or they will bring new changes," H M Bangur, Cement Manufacturers' Association president and managing director of Shree Cement said. "The industry is waiting for the real budget in June-July which will be presented by the new government," Mr Bangur added.
The cement industry has seen growth in dispatches over the past two months and the announcement of interim budget will further increase its demand. The possibility of strengthening of cement prices is very high, said an analyst with a foreign brokerage.
However, the stock market is not excited with the fund allocation, if one goes by the performance of the steel and cement stocks on Monday. While the Tata Steel stock slipped 5.20% to close at Rs 184.05, SAIL lost 4.47% to Rs 86.60. The JSW Steel stock was down by 7.47% to Rs 215.05 on the BSE. All the frontline cement stocks slipped on Monday: Grasim lost 1.19% to close at Rs 1349, ACC was down by 2.75% to close at Rs 561.45, Ambuja Cements slipped by 3.61% to close at Rs 70.70.
Will the region ever learn to stand on its own feet? The question is a little unfair. Governments did in fact learn from the Asian financial crisis. They built up current account surpluses and vast stockpiles of currency reserves that have provided a buffer during the turmoil: no Asian country has suffered a currency and banking meltdown like Iceland has.
Moreover, export-led growth is a tried-and-tested economic development model. No one is saying Asia should stop exporting. But rather than decoupling from the global economy, Asia has been steadily increasing its exposure to external demand. Asian exports of goods and services rose to 53.4 percent of GDP in 2006 from 42.8 percent in 1998, according to a European Central Bank working paper.
By comparison, the ratio in 2006 was 11 percent in the United States and 16 percent in the euro zone. The corollary is that domestic demand in Asia has been suppressed. California consumes about as much as all of China, while Texas consumes about as much as all of of India, notes Rob Subbaraman, an economist with Nomura in Hong Kong.
So if they are to turn a crisis into an opportunity, now is the time for policymakers to start implementing the plethora of reforms prescribed down the years to spur domestic consumption. A partial list would include introducing competition in industries that are frequently dominated by one or two state-owned or politically well-connected firms; making it easier to start service businesses; nurturing deep financial markets, especially for household credit; and building social safety nets so people don't need to save as much for a rainy day.
"Greater emphasis than has been given in the past now needs to be paid to the development of reliable health services, broader access to education and the loosening up of the service sector, from Internet sales to domestic helpers," David Mahon of Mahon China Investment Management Ltd said in a report. NEED TO COORDINATE Such deep-seated changes pose a daunting challenge for countries with sometimes creaking administrative machinery. Reform will also entail taking on vested interests that do well out of the present growth model.
"All these issues are often political economy issues. So it's a question of whether countries have the maturity to proceed with this transition. Maybe, maybe not," said Dominique Dwor-Frecaut, an economist with Royal Bank of Scotland in Singapore. It is also hard to imagine a successful rebalancing of Asian growth -- a crucial element of a sounder global economy -- without an eventual strengthening of regional exchange rates.
Firmer currencies would enable Asian consumers to buy more from abroad, including services such as tourism and education, and induce a shift in investment away from export industries and into domestic sectors that make non-tradeable goods. Protective of its exports, Asia has long resisted currency appreciation and will evidently not switch tack when trade is collapsing.
But it is not too soon to start making plans. Finance ministers from 13 Asian countries will discuss expanding a currency swap and pooling arrangement to $120 billion from $80 billion at a meeting in Thailand this weekend. But they are fighting yesterday's war: the swaps have not been needed and, even if the mechanism was activated, the sums involved are a drop in the bucket next to private capital flows.
Instead, ministers should spend their time thinking about how they can cooperate to bring about collective structural change. "At the moment it would be completely impractical for them to appreciate their currencies," Dwor-Frecaut said. "But once this crisis is over -- and in my view we're talking about a 2-3 year time horizon -- they should have coordinated currency appreciation and some fiscal expansion to support their domestic sector," she added.
Subbaraman with Nomura agrees that it would be suicidal for Asia's open economies to push up exchange rates in the eye of an export storm. The Japanese bank expects Taiwan to report this week a 4.5 per cent year-on-year contraction in fourth-quarter GDP. It is also forecasting a 45 per cent plunge in Singapore's non-oil domestic exports in January from a year earlier. But Subbaraman said the omens for currency appreciation in Asia were more auspicious now than at any point in the last decade.
"There's been a collapse in global demand, which raises question marks about whether the region should continue to rely on an export-led growth model," he said. Subbaraman is telling clients that Asian exchange rates could appreciate substantially within the next two years as global capital flocks back to the region.
"It's hard to envisage it now, but Asia's the least ugly of all the regions, and when risk aversion eventually comes down -- and it will -- Asia will attract massive inflows," he said. The risk of continued intervention to brake currency appreciation is real, but Subbaraman thinks central banks will be more tolerant if fiscal stimulus packages now being implemented across the region succeed in replacing lost export demand.
"If they see signs in a year's time of demand improving, maybe they'll be more willing to let currencies appreciate," he said.
Interim Budget lack direction: Asim Dasgupta
Mr Dasgupta was particularly critical when he said the interim budget had done precious little to address the needs of the Indian economy in the backdrop of the global economic slowdown. What seemed to have peeved the MIT-educated minister most was the lack of direction on how to cope with the current slackness in global economy .
There s no provision in the interim budget on how to cope with the current economic situation in light of the global economic meltdown. However, the state finance minister remains hopeful that the concerns for the state governments will be addressed in final Union Budget for 2009-10.
But Mr Dasgupa did have a word of praise for some of acting finance minister Pranab Mukherjee s proposals. He was particularly pleased with the doubling of the annual plan outlay for programmmes like National Rural Employment Guarantee Scheme (NREGS), in step with the recommendations of the Empowered Committee of state finance ministers. But the real issues, according to him, lie in the political rigidity in implementation.
From the state level, as well as from the Empowered Committee of State Finance Ministers, we have been repeatedly urging the Centre to provide additional funds, not in terms of rigid centrally sponsored schemes, but in terms of direct central plan funding with federal flexibility, given to the states with broad guidelines for speedy implementation of infrastructure projects linked to irrigation, drainage and roads, Mr Dasgupta commented.
We are aware of the limitations and constraints of an interim budget. We hope that when the final budget is prepared, the justified concerns of the state governments are duly considered based on the interaction with the states in a democratic manner, Mr Dasgupta said.
He added that the concerns of the states hadn t been reflected in the interim budget. Besides, the figures of the central plan outlay as mentioned in this Central budget At A Glance (2009-10) for the concerned ministries such as those of rural development and urban development indicated a fall in the budget estimates for the year (2009-10) compared to the revised estimates of the current year, 2008-09.
Interestingly, West Bengal chief minister a couple of days ago, had urged Prime Minister Manmohan Singh to set up a Rs 20,000 crore infrastructure development fund to help state governments cope up with the current deteriorating economic scenario developed due to global meltdown. Mr Bhattacharjee had, in fact, written to the Prime Minister and even urged him to set up another Rs 10,000 crore fund to develop housing facilities for the BPL categories of people.
Not surprisingly, the West Bengal government is unhappy since none of CM Buddhadeb Bhattacharjee s recommendations had been considered by the UPA government in the interim budget.
In the past, banks have opted to pick up the best systems from both the acquiring bank and the target bank and integrate the two or go with the system used by the acquirer. In the current slowdown, most of the banks are opting to go with the latter because it's simpler, cheaper and faster. "In the first case, where you work out what you take from system of Bank A and what you take from system of Bank B, is where IT companies get a lot of business. In the second case, there's a bit of scaling up of systems, transferring the data and re-formatting it. But it is more of a migration than an integration job," said Mr Redshaw.
Companies like TCS and Infosys Technologies that service many top US banks were anticipating significant volume of business from integration. For instance, both Merrill Lynch and Bank of America are clients of TCS. This would have meant that TCS was a strong contender for any integration project by virtue of knowing the IT systems of both these banks.
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IT spending by financial services firms is also not likely to rebound in 2010, even if the economy picks up, he said. This is because there is always a lag between recovery and IT budgets returning to pre-slowdown levels. Mr Redshaw estimated that overall, IT budgets of banks have shrunk by 15%. A majority of this - about 70% - is still internal IT spending, and this likely to return to 2007-levels only by 2018. External IT spending, from which IT services vendors benefit, is, however, likely to rebound much faster. This is because banks are increasingly moving more work outside.
If the economy recovers in 2010, Mr Redshaw expects external IT spends to get back on track by 2011-12. "The long-term future for outsourcing is positive and healthy. Where banks will make those big cuts and where the cuts will be permanent in their internal spending," he added.
Customers have become more risk-averse in the current environment after the Satyam scam. And, vendors are evaluated on a number of counts including where they are headquartered, under which country's jurisdiction they operate, if they have a US listing and what disclosure norms they follow and where their board is domiciled
Service sector to see slower growth, says industry lobby
According to CII, recent data on specific service sector activities gives a mixed picture - while there has been a sharp drop in indicators such as tourist arrivals or air freight and passenger movements, railway traffic and cellular subscriber growth have been holding up.
In banking, deposit and credit growth have begun to slow down - though only moderately. Given that the service sector accounts for over 50 percent of GDP, trends in this sector will have important implications for growth in the coming year, the industry lobby noted.
CII also said the manufacturing sector has been severely affected, with the growth in net sales of a sample of 324 companies declining from 32.4 percent in the quarter ending September 2008 to 6.6 percent in December 2008.
Profit after tax (PAT), which declined by 4.3 percent in the second quarter, showed a further decline of 28.5 percent the next quarter ending December 31.
The study said the global financial crisis has had a significant impact on domestic monetary conditions: as capital outflows gathered steam, the Indian banking system faced a severe liquidity crunch in September and October.
This, CII said, has had an impact on banks' lending behaviour. Banks are averting taking risk, on account of increased fears of default.
Subsequently, credit growth has witnessed a slowdown, especially in the small scale sector. The year-on-year growth in bank lending has dropped from a peak of 29 percent last October to 22 percent as of Jan 16, 2009.
Technology & tolerance: Tools to treasure Diversity, and freedom to espouse it, is necessary for organisations, and also for a technologically and resurgent India. |
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Good governance alone will help India to meet the challenges of the current economic crisis and realise its promise as a dynamic market.
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Downturns reveal a company's weaknesses. An organisation focused during a period of expansion may be ineffectual when demand drops off.
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SC gives conditional nod to debt transactions by banks 'One in three Asian cos may freeze base pays this year' Budget fails to cheer exporters; more layoffs feared Satyam soars on SEBI relaxation of takeover norms Moser Baer India promoter pledges 1.56 per cent stake Textile, fertiliser stocks plunge on BSE despite govt measures Hosiery manufacturers body disappointed over interim budget Realty firms plunge as interim budget disappoints investors Educomp appoints Grant Thornton as internal auditor AAA Project Ventures pledges 16.35 pc stake in Reliance Infrastructure China warns protectionism will hurt recovery Singapore Airlines to cut capacity, ground planes Japan economy contracts sharply in fourth quarter Obama adviser: Auto industry must restructure Dubai firms to seek avenues in India's IT sector Travel and tourism industry go for online ads OPEC willing to cut output: Qatar energy minister Economy, opportunity spur interest in India RBS to unveil 'brutal' cost-cutting measures: Reports
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