The Double-Digit Inflation More Weeks - June 30,2008

Inflation for the week ended June 14 rose at an annual rate of 11.42 per cent, as compared to 11.05 per cent in the previous week. On a week-to-week basis, the oil did not contribute hugely for this inflation rise, as the recent fuel price hike was already reflected in the June 7 inflation data. Instead, the manufacturing, food and minerals contributed majorly to the rise. The manufacturing index was up by 0.6 per cent, food products rose by 0.7 per cent and minerals surged by 3.6%. Inflation for the week ended April 19 was revised to 8.23 per cent from 7.57 per cent.

Finance Minister P Chidambaram on June 26 said that the double-digit inflation would stay for some more weeks, before moderating. It said that the inflation is likely to go up to 11.6 per cent. Chidambaram also indicated that the government and the Reserve Bank of India would not hesitate to take more steps to rein in soaring prices, if need arises.

International Brokerage And Equity Research Major CLSA Analyst - June 30,2008

Having lost over one-third of its value in less than six months, stock market seems to have more pain in store for investors with experts seeing the benchmark Sensex heading back towards 12,000 level in the next few months. The continuing crude oil rally and unabated selling by FIIs are unlikely to let the market see a near-future uptrend, while domestic factors like inflationary pressures and rising interest rates are also playing spoilsport, analysts believe.

International brokerage and equity research major CLSA analyst and renowned portfolio manager Christopher Wood has told his clients in the latest June edition of his famed Greed and Fear report that the Senses dropping back to a 12,000 level could not be ruled out in the wake of surging oil prices and continuing selling activities by foreign investors. Certainly, a re-test of the 12,000 level on the Sensex cannot be ruled out in these circumstances. And that will be accompanied by a further weakening in the rupee, Wood said.

Inflation Is Likely To Peak At Around 13 Per Cent - June 30,2008

Inflation is likely to peak at around 13 per cent over the next two months before gradually moderating to around 8.5 to nine per cent by end-this fiscal, economists said.The country''s economic growth too would moderate below the earlier-forecasted eight per cent to around the 7.5-7.8 per cent level in FY 09, they said.

Global fuel prices present the most concern to policy-makers, the economists said. Inflation will be contingent upon oil prices, Crisil''s Director and Principal Economist, D K Joshi, said.Prices of products such as aviation turbine fuel and naphtha have shot up 40 per cent year-on-year, Enam Securities'' Chief Economist, Sachidanand Shukla, said.

While inflation would peak at around 12.5-13 per cent, Joshi expected the yearly average inflation rate to be around the 8.5 to nine per cent mark.This figure, again, is much higher than the 5.5 per cent projected by some economists earlier. Rao, however, pegged the average at a much higher nine to 9.5 per cent.Economic growth would be below the eight per cent mark, "maybe even below the 7.5 per cent mark", Bank of Baroda''s Chief Economist, Dr Rupa Rege Nitsure, said.But other economists such as Joshi and Enam''s Shukla felt that it would be in the 7.8 per cent range.

Oil Exporting Countries Maintained Exceptionally Low Prices - June 28, 2008

Further, an impending hike in its main refinancing rate by 25 basis points, the European Central Bank, thanks to the rising inflationary pressures, is also contributing to the slump in the dollar.

With the dollar dropping, investments were diverted to oil, traders said. Also, as the equity market, world over, is subdued, hedge funds and pension funds are parking their investments in the crude, counter leading to heavy rallies fuelled by good volumes, a broker said.

Meanwhile, a market correction for oil prices is expected after it hits $150 a barrel. “There has been an unprecedented rally ever since crude touched $90, and there has been no correction ever since. It will come down to $110 after this correction,” a broker said. Oil prices have already gained 50% this year.

DK Joshi, principal economist, Crisil said, “We feel that crude will settle between $110-120 per barrel once demand is moderated with various countries increasing prices of oil.

There is already a slowdown and demand will moderate, even as supply has not risen. At this stage, I do not think we will revise our estimates. However, if oil touches $200 per barrel by year end, it will be a scary scenario that will have a detrimental impact on the oil subsidy bill.”

While countries, including India, have raised prices by as much as 10%, Malaysia has hiked prices by 41% and Indonesia by almost 30%. Cases like these will moderate demand. On the other hand, oil exporting countries have maintained exceptionally low prices — petrol in Venezuela costs Rs 2/litre.

Also, oil producing countries such as Indonesia, Russia, Saudi Arabia and Venezuela face double-digit inflation rates ranging from 10.5% to 29.3%.

So, what does this recent hike means for India? Prices of other oil products that are linked with international prices of crude, will go up significantly.

Already, the hike in prices of naphtha, furnace oil and other products are contributing as much as half of the overall increase in inflation on account of oil. The most disturbing fact about the present crude oil crisis is while global oil consumption grew by 1.1% or 1,000,000 barrels per day in 2007, the global oil production fell by 130,000 barrels per day.

Last week, finance minister P Chidambaram had said increase in oil prices was due to “unregulated over-the-counter markets and futures trading in oil”.

At the recently held meeting of energy ministers in Jeddah, he proposed a Price Band Mechanism. As per this, consuming countries must guarantee that oil prices will not fall below an agreed level and producing countries must guarantee that oil prices will not rise above a guaranteed level.

Last Quarter By Inflation Likely To Ease - June 28,2008

Economists said the rise in the most keenly watched cost of living index may continue to be in double-digit for some more time, but would ease to single digit levels by March next year. This, however, will hinge on how crude oil prices, which now rules above $140 a barrel, move, they added.

“We could expect double-digit inflation for most of calendar year 2008 unless there is a dramatic change in the international prices of oil and other commodities like steel.

Domestic inflation is also a function of global commodity prices. Inflation is likely to ease by the last quarter of the fiscal. My forecast for the economy is a 7.8% growth for the current fiscal,” said leading economist Saumitra Chaudhuri.

Oil As Inflation Brews With Gold To Catch-Up - June 28,2008

NEW YORK: The specter of inflation and a bear market in equities is a powerful formula to rekindle investor interest in gold, which looks to be staging a catch-up rally after lagging other commodities in 2008.

Bullion, which has often moved in lock-step with oil because of the metal's appeal as a hedge against inflation, has in the last several months parted ways with the energy and grain markets, which have soared to record highs.

Yet, in the wake of US Federal Reserve's decision this week not to raise interest rates but its warning that inflation is a growing threat, a sudden resurgence in gold appears to have revived its positive correlation with oil. That should mean gold benefits as resurging inflation continues to wreak havoc for the stock markets, erode the value of the dollar and drive equity investors to seek returns elsewhere.

Heightened Vigil Is Required To Anchor Inflation - June 27,2008

The inflation is seen to rise to a new 13-year high of 11.20% for the week ended June 14, against 11.05% in the previous week. This would be the highest level since April 8, 1995. Machinery & transport equipment, iron & steel, fibres and oil seeds are expected to be the major contributors for the rise. Separately, commerce minister Kamal Nath said on June 26 that inflation is expected to peak now and heightened vigil is required to anchor inflation. JP Morgan also said on June 26 that the Reserve Bank of India may further raise rates by 25 bps on July 29. The government and RBI have taken several fiscal and monetary steps to cool inflation, but these measures may also have a slowdown effect on economic expansion. The government is now desperate to streamline the economy and the options are running out. After inflation hit 11per cent and interest rates moved up, policy measures have clearly been exhausted.

High Interest Rates, A Slowing Global Economy, GDP Growth - June 27,2008

Inflation, fuelled by surging energy and commodity prices and interest rate hikes by the Reserve Bank, could pull down India''s economic growth from the projected eight per cent to 7.8 per cent this fiscal. High oil prices, strong input costs and a depreciating Rupee continue to exacerbate inflationary and other pressures. High interest rates, along with a slowing global economy, will trim GDP growth to 7.8 per cent in 2008-09," Standard & Poor''s Asia-Pacific Chief Economist, Subir Gokarn, said. The inflation rate was expected to be around 8.5 to nine per cent during this fiscal. Rising inflation, a forecast slowdown in economic growth, and turmoil in the global financial markets have dampened investor confidence and led to foreign capital outflow.

This has led the rupee, which was already under pressure from a rising oil import bill, to depreciate as sharply this year as it appreciated in 2007, the statement said. As global market conditions become more stable and oil prices moderate, the rupee could appreciate to around Rs 41-41.5 vis-a-vis the US dollar towards the end of the fiscal year, the statement added. The country''s current account deficit was expected to swell to about 2.6 per cent of GDP. "Fiscal improvements in the past few years are likely to be reversed this year, due to a surge in oil, fertiliser and food subsidies," the statement also said.

FM: Some More Weeks For Double- Digit Inflation - June 27,2008

A day ahead of the release of official data, Finance Minister P Chidambaram on June 26 said double digit inflation would be there for some more weeks and the Government as well as RBI would not hesitate to take more steps to rein in soaring prices, if need arises. Pointing out that the Government and RBI have already taken measures to control inflation, he said, "If necessary we will not hesitate to take more fiscal and monetary measures." However, Chidambaram admitted that the UPA may be defensive on high inflation in elections. To a question whether the UPA starts as a loser in elections because of high inflation, Chidambaram said, "Well that is a premature conclusion. We will be on defensive on inflation, but as I have said all politics is about communication. We must communicate to the people why prices are high and the efforts we are taking to moderate it.

"When asked whether the Government would go for another round of hike in prices of petroleum products, the Finance Minister said it is not feasible at this point of time when inflation rate is at double digit. "I don''t think given the double digit inflation, such a thought (of raising petroleum prices) is possible at all. I think given double digit inflation, given my earlier caution, that price increase will result in double digit inflation I don''t think there is appetite now for a further increase in prices," he said.

I-T Dept Unable To Process Tax Returns - June 26, 2008

Finance Minister P Chidambaram is living in the hope of tax collections remaining buoyant. Advance tax numbers so far reflect a hope. But there is a massive problem at the ground level. FM''s own men are saying that the tax department lacks the capacity to absorb and process growing number of tax returns. With over 3 crore taxpayers on the IT department''s record, the taxman has admitted that the department has a capacity to process only 2.48 cr tax returns. For the fiscal ended, 2.75cr returns have already been filed. What is more shocking is the fact that the no of tax returns lying unprocessed or the cumulative pendency of returns has shot up to 1.78 crore, upto April 1, 2008.

These numbers have been shared with the finance minister during the chief commissioner''s meeting held last month. It is ironic that in the same meeting, the finance minister told his taxmen to hike the target for tax collections to Rs 4 lakh crore.

Rupee Ends At 42.74 Against Dollar - June 26, 2008

The rupee increased by about 23 paise after the Reserve Bank of India hiked repo rate and CRR. The rupee opened at 42.88/90 and reached the day''s low of 42.92/93, before closing at 42.73/74, higher from the previous close of 42.96/97. In the forward premia market, the six month closed at 4.51 per cent (4.3 per cent) and the 12-month at 4 per cent (3.83 per cent).

RBI Hikes Key Rates By 50 Bps; Loans May Become Dearer - June 25, 2008

Challenged by unrelenting inflationary pressures, Reserve Bank on Tuesday announced stringent measures of hiking mandatory cash reserve of the banks and its short-term lending rate to them to suck up an estimated Rs 20,000 crore.

According to analysts the move could make loans dearer for housing, car and personal expenses as also to the industry. Announcement of hiking cash reserve ratio by 50 basis points and the short-term lending (repo) rate by a similar margin comes close on the heels of RBI Governor Y V Reddy discussing with Prime Minister Manmohan Singh and Finance Minister P Chidambaram the prevailing inflation scenario.

Reflecting the Finance Ministry''s view that monetary policy would be the first line of defence against inflation that has surged to a 13-year high of 11.05 per cent, the RBI after intense consultation today pronounced the new measures, part of which would be effected in installments.

FDI May Fall Short Of Target: Survey - June 25, 2008

Global economic slowdown and spiralling inflation caused by increasing oil prices may adversely impact realisation of the foreign direct investment (FDI) target of $35 billion in the current fiscal.This is the realistic assessment of FDI inflows by of 400 CEOs who felt that the FDI target is likely to fall short by $7-8 billion. They were taking part in a survey conducted by Associated Chambers of Commerce and Industry of India (Assocham).

Adverse sentiment in the stock markets, bottlenecks on infrastructure investments, government''s inability to sign nuclear deal are some of other reasons due to which the FDI target may fall short, the survey said. The chamber has asked the government to take sufficient measures to mount pressure from various bilateral and multilateral agencies on oil producing countries to increase oil production. In fact, recently Finance Minister P. Chidambaram has appealed the oil producing countries to increase its supply to control prices. He had advocated for a price band mechanism for crude oil for producers and consumers to find a common ground. The government had set a target of $30 billion in the last fiscal, but it received about $25 billion FDIs.

Inflation Has Risen Rapidly By 441 - June 24, 2008

Surging inflation is expected to dent the hiring prospects in India, the country rated as the most optimistic nation for employment globally, industry experts say. Moreover, any hike in salaries would not be that much beneficial for employees as the increase would largely be eroded by the rising prices of commonly used items, experts say. The wholesale price-based inflation spurted to 11.05 per cent for the week ended June 7. Inflation has risen rapidly by 441 basis points since January 2008.

Indian Rupee Gained Against Dollar - June 24,2008

The Indian rupee on June 23 gained three paise at 42.96/97 against the greenback on sustained capital outflows amid weak equity markets and some dollar selling by exporters. At the Interbank Foreign Exchange (Forex) market, the domestic currency moved in a very limited breadth of 42.95 and 42.98 a dollar before ending at 42.96/97 from previous close of 42.93/94 per dollar.

Forex dealers said intervention by the central bank to support the rupee helped the local unit to remain range bound through the day and closed at the opening level.Sustain offloading by Foreign Institutional Investors (FIIs) mainly weighed on the rupee sentiment, they said. FIIs sold shares worth $2.09 billion in the current month till June 23 and also pulled out a whopping nearly $5.9 billion in the current calender so far.

Highest Advance Tax - June 24, 2008

After a string of bad news on the economic front starting with spiraling fuel prices to a double digit rate of inflation, finally there seems to be something for the Finance Minister P Chidambaram to cheer about.

The advance tax payments for the first quarter of 2008-09 are up 27 per cent to Rs 20,700 crore in spite of interest rate pressure. The banking sector is doing well with ICICI Bank paying in Rs 340 crore and SBI''s advance tax increasing 31.8 per cent to Rs 663 crore.

With crude prices reaching for the sky, the upstream oil companies are cashing in with ONGC paying the highest advance tax at Rs 1342 crore and GAIL paying Rs 335 crore.

But all is not well in India Inc just as ONGC is raking in the moolah those who depend on coal and oil are a worried lot. The metal and mining companies have also put up a good show like Tata Steel which has benefited from a price hike at Corus paying Rs 356 crore in taxes and the National Mineral Development Corporation posting a figure of Rs 400 crore.

Double-Digit Inflation A Rarity In India - June 23, 2008

A double-digit inflation rate has been a rarity in Indian economy and it was only in early 1990s and during 1994-95 that inflation hovered above the ten per cent mark, according to the website of Reserve Bank of India.

The RBI website, which gives average monthly inflation figures with the base of 1993-94, tells that the last time inflation was in double digit was in April-May 1995 when it ruled above 11 per cent. The mid 1990s saw a very high inflation and for 12 months in a row from June 1994 till May 1995, the rate of inflation was in double digits.

Prior to that, there was a period when the economy witnessed double digit inflation for a period of 21 months, from November 1990 till July 1992 with a high of 16.3 per cent recorded in September 1991.However, the base year for calculating the inflation numbers at that time was the year 1981-82.The all-time high for inflation was recorded in February and March of 1995 when it hit 16.9 per cent. Given the current inflation rate at 11 per cent, we are still far away from going anywhere near the all-time high levels, an analyst suggested.

The mid 1990s was also the period when inflation went down dramatically . The RBI data suggests that inflation dropped gradually from 11 per cent plus in May of 1995 to 4.5 per cent in February 1996. Subsequently, it was a period of low inflation with only occasional blips. The lowest level was in February 2002 when it was only 1.4 per cent.

India Inc''s Effective Tax Compliance Rate Up To 26 Pc In ''07-08 - June 23, 2008

Direct tax receipts from companies and personal income have gone up by 71.3% in the first two months of the current year compared to the same period last year. The unit price realisation rose sharply, inflating net margins and by extension increased corporate tax provisions too. So far so good. But what is significant is that the tax collection in 2007-08 has increased at a higher rate than that of the pre-tax profit. The aggregate collections have increased 28.3% in 2007-08 over 2006-07 as against 26.8% rise in pre-tax profit during the same period. This has raised the effective compliance rate, that is, tax as percentage of pre-tax profit, from 25.6% in 2006-07 to about 26% in 2007-08. A 0.4 percentage point rise in compliance rate may not look very impressive, but it shows a positive trend, especially since pre-tax profit itself has increased at a very high rate. Take the case of Indian Oil Corporation, the fourth biggest tax payer in the list. Following sharp rise in crude prices it has witnessed a decline in pre-tax profits in 2007-08, but its tax provisions have increased raising the effective tax compliance rate from 28.5% in 2006-07 to 30.9% last year. And if the tax compliance rate of Steel Authority of India (Sail), the biggest tax payer in the list has remained same at 34.3% in both the years, what is important is that it has provided for much higher taxes in 2007-08. Sail earned a record pre-tax profit of Rs 11,471 crore in 2007-08 following sharp rise in steel prices and as a result, even at the same compliance rate the actual collections were substantially more than that of the previous year. As such, at 34.3% Sail''s tax compliance rate was way ahead of 26% for the sample companies as a whole. But not Sail alone, the steel companies in general seems to have higher compliance rate compared to India Inc. Nine steel companies in the list together have provided for 32.1% of their pre-tax profits towards taxes in 2007-08 as compared to 26% of India Inc.

Inflation: It Hurts The Most At The Bottom - June 21, 2008

NEW DELHI: Inflation, at first glance, might seem like something that hits everybody. That’s misleading. The truth is that inflation typically hits the poor much worse than anybody else.

Applying a little common sense should make it clear why this is the case. When prices are generally rising, whether you gain or lose from it depends on whether the prices of things you sell are rising more than prices of things you buy.

For a trader, therefore, if his selling prices are rising faster than those at which he buys, his profit margins are increasing, not shrinking. A similar logic would apply to industrialists.

But what of those who only sell their labour and buy all that they need to subsist ? You might say, wages rise too in an inflationary period. But wages are typically the last to go up in response to the increasing cost of living. There is thus a lag in which incomes are struggling to catch up with expenditure.

In India, it might seem inaccurate to describe the poor as those who have nothing but their labour to sell. After all, there are hundreds of millions in the peasantry who are quite poor. Don’t they gain when prices of what they produce — wheat, rice and the like — go up? Unfortunately, not quite. The fact is that the majority of India’s rural population is either landless labourers or small and marginal farmers with tiny tracts of land to cultivate. The bulk of them are net buyers even of agricultural produce. Thus rising farm output prices do not help them.

The situation is made worse by the fact that such farmers would tend to do the bulk of their selling at harvest time, when prices of their produce are relatively low and buy the same thing later in the year when prices are higher.

Another reason why the poor are worst hit by inflation is the fact that they obviously have little or no savings. They also have little or no consumption that is dispensable . The only way they can cope with higher prices, therefore, is to cut back on essential consumption. When the inflation is driven by food prices — as is currently the case, at least partly — the impact on them is particularly bad since food forms a much larger part of their consumption basket than for the relatively better off.

In effect, thus, inflation acts as a sort of invisible hand that takes incomes away from the pockets of the poor and deposits them in those of some of the rich.

RBI Must Take Immediate Steps To Control Runaway Inflation - June 21, 2008

NEW DELHI: Inflation at 11.05 per cent for the week ending June 7 on the wholesale price index is a shock in double digits. A higher than two percentage points rise in the inflation rate will push the government further to the wall than it already is on how to handle the raging fire in the economy.

The stock market reacted sharply, falling by over 500 points to end a dismal week of performance. The current inflation is clearly caused by the global spike in oil prices. Indicators point to the fact that fuel prices led much of this rise. If anything, the food index has gone down by 1 per cent and the non-food index is only marginally higher.

We know that the current inflation is essentially imported. But we have to tackle it the best we can at home. There is a need for stringent demand side and monetary measures. It is time for the Reserve Bank to use all possible tools it has at its disposal to douse the fire. As an immediate step, it may be a good idea for the central bank to let the rupee appreciate a bit.

That would ease import prices of crude as well as some other commodities. An appreciation of the rupee could help in containing inflation also by mopping up some excess liquidity in the system, though it is not a solution without attendant risks.

An appreciated rupee can help bring down landed prices of imported items, thus boosting supply at lower prices. But a more expensive rupee will affect exports. Besides, selling dollars to help the rupee rise is a suggestion that the RBI might argue would lead to other negative effects. Nevertheless, we will have to live with the side effects because controlling inflation must be the central bank’s top priority now.

Along with this, other tools should also be used. Interest rates are effectively negative today, given the rate of inflation.

Tightening money supply is now necessary despite the restraints it might cause in the economy’s growth. Inflation at current levels hurts people, creates economic instability and even political disruption, and is therefore a bigger threat than a slowdown in the pace of growth.

Runaway inflation is an unannounced and painful taxation on people. This time around, it may not be the government’s fault. Indeed, most of it is imported and is hurting economies around the world. But our monetary managers must take urgent domestic action to minimise inflation’s nasty aftereffects . Which means that the RBI will soon have to take some hard decisions.

Rupee Depreciates Against Dollar - June 20, 2008

The rupee went up around the 43 mark against the dollar on June 19, led by a falling equity index and dollar buying by foreign banks. Regular dollar selling by nationalised banks helped prevent a sharp fall in the rupee. The domestic currency opened at 42.93 and closed at 42.96, against the previous close of 42.89. The forward premia went up, driven more by sentiment. The six month closed at 3.28 per cent (2.82 per cent) and the 12-month at 2.99 per cent (2.53 per cent).

RBI Defers Guidelines On Credit Derivatives - June 20, 2008

The RBI has decided to hold off on final guidelines on introduction of credit derivatives in India. The central bank said that the decision has been taken so as to be able to draw upon the experience of the financial sector of some of the developed countries, particularly in the current market situation and the recent credit market crisis.

Infrastructure Sector Growth Declines To 3.6% In April - June 19, 2008

The growth rate of the six core infrastructure industries witnessed a dip in April this year compared to the same month last year. The combined growth recorded by the six core sector industries fell to 3.6 per cent in April as against 5.9 per cent in April 2007.

A more than 10 per cent growth in coal production along with improved performance by the steel and cement sector prevented the infrastructure index from dipping further under pressure from poor growth in electricity generation, crude oil production and petroleum refinery output. Coal production went up by 10.3 per cent in April (0.6 per cent in the same month last year), cement output gained by 6.9 per cent (5.8 per cent) while crude steel production improved by four per cent (2.7 per cent).

The three industries that created the downward pressure on the index are crude oil (from 1.4 per cent in April 2007 went down to 0.9 per cent in April 2008), refinery output (from 15.1 per cent to 4.3 per cent) and electricity generation (from 8.7 per cent to 1.4 per cent). In absolute terms, crude oil production in April 2008 was 2.81 million tonnes (2.79 mt in April 2007), petroleum refinery output was 12.13 mt (11.64 mt) and electricity generation was 58,815 GwH (58,030 GwH). Coal production went up to 34.98 mt (31.72 mt), cement output increased to 15.52 mt (14.52 mt) while steel production was 4.13 mt (3.97 mt).

Higher TDS Collection Lifts Direct Tax Receipts 71% In April-May - June 19, 2008

The Center''s net direct mop up registered a 71.28 per cent rise during the first tow months of the current fiscal. The mop up went up during the period from Rs Rs 13,335 crore to Rs 22,840. This has been possible by higher tax deduction at source (TDS).

Personal income-tax (including fringe benefit tax, securities transaction tax and banking cash transaction tax) went up by 73.05 per cent in April-May 2008 to Rs 14,690 crore (Rs 8,489 crore). Corporate tax collections during the first two months of the current fiscal grew 68.05 per cent to Rs 8,126 crore (Rs 4,835 crore). The UPA Government''s strategy of moderate and stable direct tax rates has paid rich dividends in the last four years, especially in terms of better compliance. The tax payer base has gone up from 3.08 crore in 2004-05 to 3.27 crore in 2007-08. The high rates of economic growth have also helped and the revenue department is looking to raise about Rs 4 lakh crore from direct taxes this fiscal. The robust collection performance in April-May 2008 has come in the backdrop of Budget 2008-09 announcements on personal income-tax, when the threshold limit of exemption was hiked to Rs 1.5 lakh for all assessees.

Indirect tax rise 12.8% in April-May - June 18 ,2008

Indirect tax collections, excluding service tax, rose 12.8% in the first two months of the current fiscal, which has resulted in the government raising Rs 35,216 crore as against Rs 31,217 crore in the same period last year.

Excise duty mop ups recovered from a decline in April to post a healthy 4.4 per cent growth in May, according to data released by the finance ministry here today. Excise duty collections had fallen to Rs 6,410 crore in April from Rs 6,673 crore in the same month last year.

Customs duty collections went up by 25.1 per cent for the two months at Rs 19,223 crore, compared with Rs 15,848 crore during the same period last year. Customs duty collections grew 25.2 per cent to Rs 10,205 crore in May.

Service tax collections, data for which are available only for April, grew by a whopping 40 per cent to Rs 6,093 crore. Customs duty and service tax collections are targeted to grow at 14.4 per cent and 26.1 per cent during the current fiscal, respectively. Despite a cut in Customs duty on various items to tame the spiralling inflation rate, the government is hopeful of meeting the collection target for the fiscal.

The government has said that it would incur a revenue loss of

Rupee inches up to 42.88 against US dollar - June 18, 2008

The US dollar ended cheaper against the rupee at Rs 42.89/90 per dollar at the close of the Interbank Foreign Exchange (Forex) market in Mumbai on June 17. The rupee showed signs of improvement in the morning trade on Tuesday, rising by about four paise to 42.91/92 against the US currency amid steady equity markets.

The activity was dull at the exchange market in the absence of any market moving factors, dealers said. Meanwhile, the Reserve Bank of India (RBI) fixed the reference rate for US dollar at Rs 42.92 and for single European unit at Rs 66.66. The rupee premiums on forward dollar continued its slide for another day and ended sharply down due to sustained receivings by exporters. The benchmark six-month forward dollar premium payable in November ended at 46-1/2 - 48-1/2 paise, lower from 57 - 59 paise on Monday and the far-forward maturing in May closed down at 92 - 94 paise from 106 - 108 paise previously.

In cross currency trades, the rupee also turned stronger against the British Sterling and improved against the Japanese yen. It, however, held steady against the Euro.The domestic currency bounced back with a vengeance against the pound sterling and ended higher at Rs 83.55/57 per pound from its previous close of Rs 84.29/31 per pound and also turned dearer against the Japanese Yen to Rs 39.64/66 per 100 yen from its last close of Rs 39.68/70 per 100 yen.

Rupee At 42.94 Against US Dollar - June 17, 2008

The Indian rupee failed to hold on to early gains and closed steady at 42.9450/9550 against a US dollar on Monday as demand for US currency from oil importers strengthened following easing of global crude prices and on strong equity markets.

At the Interbank Foreign Exchange (forex) market, the Indian unit moved in a range of 42.88 and 42.98 during the day after resuming stronger at 42.90/92 a dollar against its last weekend''s close of 42.94/95 a dollar.The rupee had firmed up to 42.88/89 a dollar in late morning trade following buoyant equity markets.

Dealers said the local currency lost initial gains as oil companies bought dollars in the latter part of day as oil prices eased to $134 a barrel in Asian trade.Meanwhile, the benchmark Sensex bounced by 206 points, or 1.36 per cent, on Monday. Asian indices too were up by 0.18 per cent to 2.72 per cent.Oil refiners made small purchases of the greenback at the current levels to meet their monthly import payments, said a dealer with leading public sector bank.

India imports about 60 to 70 per cent of its oil requirements and import payments of oil companies increased substantially following a sharp rise in global crude prices in the last couple of months.Heavy capital outflows in the current calendar year also weighed on the rupee sentiment.

Forex Reserves Increase $1b - June 16, 2008

The foreign exchange reserves increased by $1.046 billion to $315.7 billion for the week ended June 6. In the previous week, the reserves had fallen by $1.56 billion. According to the RBI''s Weekly Statistical Supplement, foreign currency assets rose by $1.045 billion to $305.93 billion. Foreign currency assets expressed in dollar terms comprise the effect of appreciation or depreciation of non-US currencies (such as euro, sterling, yen) held in reserves. Gold and SDRs remained unchanged at $9.2 billion and $11 billion, respectively. The reserve position in the IMF rose by $ 1 million to $527 million.

India May Miss Export Growth Target - June 16, 2008

India is likely to miss the export target of $200 billion for the current fiscal owing to slowdown in the US and European markets, restriction on shipments of many commodities and higher fuel prices, a survey by industry body FICCI said. The study said the rise in oil prices is likely to get reflected in exports as well as the higher fuel prices has led to a hike in ocean freight rates, prompting importers to source from closer production units.

Foreign buyers are showing preference to source from closer production points to save on the freight costs. If this trend gains momentum then domestic exporters would have to reorient their market strategies.The buyers in the US are considering increasingly sourcing from the markets of Canada, Mexico and other Latin American countries due to export restrictions in India.Indian has banned exports of pulses, edible oil and non-basmati rice, besides it has hiked export duty on long steel products to 15 per cent.

G8 Finance Chiefs Call For Oil Output Hike - June 14, 2008

OSAKA: Top world finance officials called Saturday for an urgent boost to global oil production and a probe into the recent wild swings in energy prices, including the role of speculators.

Finance ministers from the Group of Eight industrialised nations gathering here are worried that soaring oil and food costs could threaten global economic growth and stoke inflation.

"We urge all (oil) producing countries to increase production and to invest to enhance refinery capacity," they said in a joint statement, according to a G8 source who asked not to be named.

They said greater transparency in the oil market and more reliable data were needed, including on "the size of financial flow coming into the oil market."

The G8 called for an investigation involving the International Monetary Fund into the recent spike in crude oil prices.

The ministers asked the IMF and the International Energy Agency "to work together with appropriate national authorities in carrying out further analysis of real and financial factors behind the recent surge in oil prices and volatility, and the effects on the global economy."

World oil prices have been on a rollercoaster ride recently, soaring close to 140 dollars a barrel on worries about tight supplies, with some blaming market speculators for aggravating the wild swings.

Oil prices have soared five-fold since 2003 due to a variety of factors, including turbulence in the Middle East and rising demand in emerging economies such as China and India.

Oil Surge Bigger Than Dotcom Stock Boom - June 14, 2008

NEW YORK: The rally that drove oil to a record $139.12 a barrel last week surpassed the gains in internet stocks that preceded the dot-com crash in 2000. Crude rose 697% since trading at $17.45 a barrel on the New York Mercantile Exchange in November 2001, and reached 28 record highs this year. The last time a similar pattern was seen in equities was eight years ago, when internet-related stocks sent the Nasdaq Composite Index up 640% to its highest level ever, according to data compiled by Bloomberg and Bespoke Investment Group.

The Nasdaq tumbled 78% from its March 2000 peak, erasing about $6 trillion of market value, as investors concluded that prices weren’t supported by profits at companies such as Broadcom and Amazon.com. Billionaire investor George Soros and Stephen Schork, president of Schork Group, say oil is ready to tumble because prices aren’t justified by supply and demand.

“There’s nothing different between this mania, the dot-com mania, the real estate mania, the Dow Jones mania of the 1920s, the South Sea bubble and the Dutch tulip-bulb mania,” said Schork, whose Villanova, Pennsylvania-based firm advises the Organization of Petroleum Exporting Countries, Wall Street firms and oil companies on the outlook for energy prices. “History repeats itself over and over and over again.”

Oil climbed on growing demand from China and India, whose economies expanded in the past seven years at an average annual pace of 10.2% and 7.3%, respectively. Supply disruptions in Nigeria and Iraq and declining production in Russia also boosted prices. Investors added about $250 billion to commodity index trading strategies since 2003, according to Mike Masters, president and founder of Masters Capital Management, a St Croix- based hedge fund.

Money is flowing into oil as the global economy slows. The worst US housing slump since the 1930s and more than $390 billion of writedowns and credit losses at banks will slow global growth to 2.7% this year from 3.7% in 2007, according to the World Bank.

The US economy’s expansion may slow to 1.3% this year from 2.2% in 2007, dragging down oil demand by 240,000 barrels a day, according to economists. In China, the second-biggest fuel consumer after the US, economic growth may fall to 10.1% from 11.9%.

“I don’t know if you can classify it as a bubble or not,” said Masters. “But there is no question that investor demand is having an effect on price. Very little of it has to do with physical supply and demand of crude oil.” Masters testified at a Senate hearing in May on the role of speculators in commodities markets.

Gains in oil are the result of a “bubble” caused by speculation from index funds and a tight balance between supply and demand, Soros said in testimony before the Senate Committee on Commerce, Science and Transportation on June 3. ”The bubble is superimposed on an upward trend in oil prices that has a strong foundation in reality,” he said.

April Down To 7 Per Cent In Industrial Growth - June 13, 2008

Fiscal 2008-09 began on sober note with industrial growth in April dropping to 7 per cent compared to 11.3 per cent in the same month a year ago, reflecting the impact of higher interest rates and rising input costs. The performance in April, however, was much better than the 3.9 per cent growth rate witnessed during March, the last month of the previous fiscal, according the Index of industrial production (IIP) data released on June 12."We expected the IIP to be weaker as the economy is clearly slowing down. But compared to the last 3 per cent industrial growth, the 7 per cent figure gives us some reassurance that though the economic growth will slowdown but it will not be as severe as it seemed," S&P Chief economist Subir Gokarn said. The stock markets seemed charged up after the IIP data was released with the benchmark Sensex, which was down by over 400 points in morning trade, recovered to end the day higher by over 60 points at 15,250. Marketmen said 7 per cent growth better is than expected and it has boosted investors confidence. Attributing the reason for slowdown to high interest rates and increasing input costs, Crisil principal economist D K Joshi said the average industrial growth during 2008-09 is likely to be around 7 per cent.

While the growth in manufacturing and electricity sectors dipped in the month, mining posted a robust growth. The growth in manufacturing declined sharply to 7.5 per cent from 12.4 per cent in the corresponding period last year. The electricity generation also saw a steep fall to 1.4 per cent against 8.7 per cent during the same month last year. The mining sector, however, posted an impressive show of 8.6 per cent growth, up from 2.6 per cent. Meanwhile, the reserve bank on June 11 hiked the short-term lending rate by 0.25 per cent to 8 per cent, which is widely expected to further strengthen interest rates. With industrial production slowing down, he added, it was unlikely that the economy will record a growth rate of 8.1 per cent during the current fiscal. Coupled with a soaring inflation rate that touched a 45-month high at 8.24 per cent for the week ended may 24, the industrial performance was poorest in the consumer goods sector in the use-based classification.

Consumer goods recorded a growth of 8.9 per cent against 14.7 per cent in the last year and consumer non-durables growth rate dipped to 9.8 per cent in April from 18.7 per cent during the last year.

However, much to the respite of the white good industry, consumer durable segment registered a growth of 5.5 per cent during the month versus 2.4 per cent in the corresponding month the previous year. Intermediate goods production declined to 4.2 per cent compared to 10.6 per cent a year ago. Capital goods, the key sector for industrial growth, however, surged to 14.2 per cent against 10.9 per cent in April 2007. Basic goods decelerated to 4.6 per cent against 8.6 per cent in the previous year.

Double Taxation Avoidance Agreement (DTAA) - June 13, 2008

The Union Cabinet on June 12 gave its approval to the proposed amendments to the India-Syria double taxation avoidance agreement (DTAA). The existing DTAA is in force from 1985. Indian tax authorities have been looking to modify a number of DTAAs that were entered into by India in the eighties. These pacts need to be altered as many do not factor in new concepts and developments such as e-commerce, transfer pricing and mutual agreement procedure (MAP), an alternative dispute resolution mechanism now offered under tax treaties. There has been a significant expansion of global trade in the nineties, requiring a revision to the earlier DTAAs.

Central American Countries Called For Better Economic - June 13, 2008

Central American countries have called for better economic cooperation with India to increase ties between the two regions. Foreign Ministers from central American countries have conveys the desire for greater economic cooperation in an interaction with trade body Central American Integration System (SICA). Though SICA is a small group of countries, but it could show to be very critical to India as it provided free exchange of trade with other countries in the United States and also with European nations. It was held to boost better trade and bilateral relationship between the countries, which was attended by Foreign Ministers from seven out of eight SICA member countries.

Oil Falls, But Supply Fears Give Support - June 12, 2008

Oil fell almost $1 on Thursday, reversing some gains from the previous session when prices jumped closer to last week's record high, as a steep drop in inventories in US heightened supply concerns.

April Industrial Output Seen Up 5.7 Pc Y/Y - June 12, 2008

India's industrial output in April is forecast to have grown an annual 5.7 per cent, rising from March but still way below early 2007 levels as inflation risks keep monetary policy tight.

Rupee At 42.96 Against US Dollar - June 11, 2008

Rupee is fast approaching the crucial 43 level as the local unit lost nine paise at 42.96/97 against the greenback on June 10 with demand from oil companies for dollar continuing amid inadequate supply of the US currency and sluggish equity markets. The local currency resumed on a promising note at Rs 42.84/86 a dollar but later came under pressure and declined to 42.97 level as oil corporates stepped up dollar purchases. The rupee had closed at Rs 42.87/88 a dollar on June 9.

Gujarat Govt Cuts VAT On LPG, Cuts Levy On Petrol, Diesel - June 11, 2008

The Gujarat Government on June 10, declared reduction of VAT on diesel and petrol by 3 per cent each and abolished the total VAT of 4 per cent on domestic LPG, thus bringing down prices of these products by Re 1 and Rs 1.38 per litre, respectively, and Rs 13.05 a gas cylinder. Due to these measures, the total affect of revenue loss to the State Government will be Rs 1,450 crore. With the Union Government declaring a price increase recently, the diesel prices had increased by Rs 3.55 in Gujarat. The retail price of diesel in the State will now be down by Re 1/litre. The petrol price had increased by Rs 5.49, which will now be down by Rs.1.38/litre.

The State Government hopes the oil marketing companies of the Centre to pass on this benefit to the consumers with immediate effect. The loss on this account to Gujarat will be Rs 50 crore. Apart from this, the additional burden on the State Government, as a consumer in terms of increased expenditure in development works, comes to Rs 455 crore. Thus, the total affect of the price increase of petroleum products by the Centre and relief given by the State Government, the impact on the exchequer will be to the extent of Rs 1,450 crore, whereas the total impact of price rise on the State''s people would be nearly Rs 3,000 crore.

World Bank Projects 7% Economic Growth For India - June 11, 2008

The World Bank witnesses India''s economic growth to distinctly slow further to seven per cent in 2008, following an easing in its gross domestic product (GDP) growth to a still strong 8.7 per cent in 2007 from nine per cent in 2006. In its flagship annual publication Global Development Finance, 2008, released in Cape Town, South Africa on June 10, the Bank said beginning this year, inflationary pressures started to build in India with deceleration in industrial output to three per cent in April 2008, indicating growing signs of a cooling economy. But a falloff in growth in countries where migrants are employed, coupled with the sharp depreciation of the dollar, could lead to lower remittance inflows in local currency terms, the Bank said adding that this could lead to weaker consumer demand.

Volatile and declining equity prices in the region, particularly in India - just as ownership of stocks and other financial assets is beginning to take hold among the burgeoning middle-class could hamper both consumer and business outlays, while depressing overall confidence levels in the economy. It called upon countries particularly active in global interbank markets Brazil, China, Hungary, India, Kazakhstan, Russia, South Africa, Turkey and Ukraine to be concerned about the possibility that their domestic banks would face funding difficulties in international markets, should liquidity pressures in interbank markets remain at elevated levels.

India Still Expensive On Ticker Valuations Shows - June 10, 2008

The foreign institutional investors (FIIs) are increasingly becoming nervous about investing in emerging markets, as they have already pulled out funds worth $ 5 billion in last 5 months. Narrow the time to one week and it appears, some big selling has come through with India losing out the maximum among Asian emerging markets except for China. This short term liquidity squeeze has led many leading foreign brokerage houses to rework their Sensex targets.The global financial services firm UBS views Sensex may test 14,000 in near term while another financial services firm Credit Suisse says Sensex may test 13,000 by 2008 end.

But the ticker on valuations shows that India is still expensive. The current price-earnings multiple of the BSE Sensex is at 17 times against 12 to 15 times in economies like South Korea, Russia, South Africa and Brazil. Analysts say markets are likely to remain shaky in coming weeks as markets will be eyeing some crucial US economic numbers like CPI, retail and home sales data. And European cues will also be uncertain thanks to a crisis of confidence in the banking system. So, in this situation all eyes will be on global equity markets since that is where the cues for India will come from in the next few days.

FM Asks CBDT To Tax Receipts From Direct Taxes - June 10, 2008

The Finance Minister, Mr P. Chidambaram, on June 9 urged the Central Board of Direct Taxes (CBDT) to substantially revise upwards the direct tax collection target for 2008-09, in the wake of continued optimism in the economy, improved tax compliance and attendant jump in such tax receipts. The move to go in for a sharp upward revision in the budget estimates comes on the back of record direct tax collections in 2007-08, which witnessed a hefty increase of 36.6 per cent over the previous year. Against the Budget estimate of Rs 3,65,000 crore for the current fiscal, the Finance Minister had on June 9 impressed upon them the possibility of getting Rs 4,00,000 crore tax receipts from direct taxes.

Rupee At 42.66 Against US Dollar - June 9 , 2008

The Indian currency rose to 42.66 against the US dollar at the close of the Interbank Foreign Exchange (Forex) market in Mumbai on June 6. After the inflation figures were announced on Friday, the rupee is seen to strengthen further as analysts expect the Reserve Bank of India to action soon to ease price pressures.

Inflation for week ended May 24 is at 8.24 per cent, up from 8.1 per cent of the previous week. The central bank had recently announced measures to provide liquidity to state oil firms to ease their cash crunch. The central bank''s supply of dollars to the oil firms for their crude import is seen contributing to the rupee rise against the dollar.

India Inc To Drive GDP Growth: CII Study - June 9, 2008

In the backdrop of a global economic slowdown and high oil prices, coupled with increasing inflation and tight monetary policy regime at home, which are casting a shadow on the growth prospects of the country, the Indian Industry is confident of achieving 8.6 per cent GDP growth in the current fiscal. With higher gross domestic interest rates, increasing capital expenditure by the private sector and healthy ICOR (incremental capital output ratio) at around 4.0, India could record a GDP growth of about 8.6 per cent during 2008-09, the Confederation of Indian Industry (CII) has said in a study. While noting the silver lining in the clouds, the CII study, however, pointed out that the business environment had to remain conducive for India Inc to deliver the desired results. CII''s optimism is slightly higher than finance minister, Mr P Chidambaram, who expected the economy to grow by close to 8.5 per cent this fiscal against nine per cent during 2007-08. The Prime Minister''s Economic Advisory Council had projected the economy to grow by eight per cent this fiscal.

The CII said sustained growth in net profits and gradual increase in productivity and capital efficiency had enabled the Indian corporate sector to cut costs and be globally competitive. This will drive future economic growth of India, it added. Quoting an analysis on corporate sector results over the last eight quarters pertaining to manufacturing, services other than financial services and financial services sectors, the study revealed that corporate sector performance had contributed immensely to Indian''s macro economic fundamentals.

VAT Committee Meeting Likely To Discuss Sales Tax Compensation Issues - June 9, 2008

Compensation for revenue loss to the States on account of central sales tax (CST) decrease continues to be a thorny issue even as the Centre recently cut the ceiling rate from 3 to 2 per cent with effect from June 1. The CST compensation issue will come up for discussion at the forthcoming VAT panel meeting on June 16. They are now getting revenue loss compensation claims for CST reduction in 2007-08. The issue is whether the upper limit accorded recently will apply for 2007-08 related claims or not.

Prior to notification of the CST rate of 2 per cent in the last week of May, the Centre and the empowered committee had accorded that the compensation for revenue loss will be limited to the proportionate loss based on the actual collection of CST in the relevant year. The idea of increasing the general VAT rate from 4 to 5 per cent within financial year 2008-09 may also not be pursued. The Centre was keen that States increase the general VAT rate from 4 to 5 per cent and count additional revenues as part of the CST compensation.

Exporters Seek Easy US Entry For King Of Fruits - June 7, 2008

NEW YORK :A year after lifting of a ban on Indian mango imports, exporters are pressing US regulators to ease certain stringent requirements that are escalating its cost in this country so that Americans too can enjoy the king of fruits at an affordable price.

Though the Indian mangoes are among the costliest in the US, the biggest importer of the fruit with the annual consumption 250,000 tonnes, officials says the cost of a box of 12 Indian mangoes which costs between $30 and $35 could be brought down to around $15.

After lifting of the 18-year ban on the import of the fruit from India, mangoes worth $1 million were exported to the US in the past year and the figure is likely to go up to around $7 million this year, Asit Tripathy, chairman of Agricultural and Processed Food Export Development Authority (Apeda), told reporters.

He said mangoes are irradiated before being exported to the US as per the requirements of the regulators and that adds to the cost — around $150,000 per year. He expressed the hope that as the volume increases, the cost would come down.

Mr Tripathy said that Apeda, the apex body of exporters which is spearheading efforts to popularise mangoes, is discussing with regulators the possibility of the fruits being tested on arrival in the US and of random checking rather than each batch being certified separately.

Also some laboratories in India could be authorised to certify that the mangoes are safe. India, which is the biggest producer of mangoes, has two irradiation facilities already exit and another two are being set up, one in the private sector, Mr Tripathy said.

Indian mangoes need to be airlifted as due to their thin skin, their shelf life is short though irradiation increases it by a few days, he said. Apeda has lined up 10 restaurants to serve mangoes as also mango based dishes, he said.

Indian officials are hoping that the prices will come down and Americans would prefer the Indian fruit to those imported from central and south American because of its distinctive taste. The potential is huge as currently only the Diaspora form the majority of consumers, the official said at the mango fair organised by the Indian consulate.

Exporters Cheer As Govt Plans To Broaden Basmati Brand - June 7, 2008

NEW DELHI: The farm ministry plans to broaden its premium basmati brand to include other varieties of rice in a move that will exempt 400,000 tonnes of long-grain aromatic grain from an export ban and help farmers get a better price.

India, the world’s biggest exporter of rice after Thailand in 2007, allows exports of basmati but has banned shipment of other grades since March, when dwindling stocks and soaring prices encouraged many countries to halt exports to boost local supply. Exporters, hit by the ban, demanded that the government allow export of premium non-basmati grades, Pusa 1122 and CSR 30, as controls on exports of premium grades did not help the poor. For export markets, the commerce ministry currently regards 11 varieties of rice as basmati.

A farm ministry official, who did not want to be identified, said other varieties of rice would be regarded as basmati if they met parameters on grain length, aroma, thickness and are cultivated in regions where basmati is grown. “The definition has changed ... but to include any new variety, the grain will have to pass through a rigorous set of tests,” he said. “For any new category to be included in the list of basmati varieties, it has to be ensured that there is linkage between the variety and the geographical indication,” the official said.

Analysts said this was important because India wanted to protect the brand and allow its use only for grain cultivated in parts of India and Pakistan, in a similar manner to French Champagne or Darjeeling tea. “If you redefine basmati, it may create some problems in the WTO,” said TK Bhaumik, an economist and the chairman of the economic affairs committee at Assocham, a leading industry chamber.

But rice exporters cheered the government’s move to broaden basmati and said the two varieties being considered would qualify. “For all practical purposes these two varieties are nothing else but basmati and I’m very sure they will be declared basmati very soon,” said Vijay Setia, president of the All India Rice Exporters’ Association.

Food and agriculture farm minister Sharad Pawar said last month that he wanted to encourage the export of premium grades as these were either exported or consumed by the wealthy, not used for subsidised supply to the poor. He said export of high-quality rice also boosted earnings of farmers — a sensitive issue in India, where thousands of impoverished and indebted farmers facing soaring fuel and fertiliser prices have committed suicide.

Last month, leading rice exporters said the curb on overseas sales, including a tax on basmati exports, may prompt shippers to pay a lower price to farmers and encourage them to switch to oilseeds or other crops.

Sales Tax Cut On Fuel - June 6, 2008

Four states played good samaritan to people suffering from a hike in fuel prices by slashing taxes that made petroleum products a tad cheaper, even as the Prime Minister asked his colleagues to avoid foreign travel and cut back on spending.Delhi, Bihar and Tamil Nadu today followed West Bengal''s example and announced cut in sales tax on fuel sales to cushion the impact of yesterday''s steep price hike on users.

Congress President Sonia Gandhi and the BJP also separately asked chief ministers of states ruled by their respective parties to cut sales tax on petroleum products.Petrol and diesel prices were yesterday hiked by Rs 5 and 3 a litre, respectively, and cooking gas by Rs 50 a cylinder, a decision that was marked by protests and shutdown in Left- ruled states of West Bengal, Kerala and Tripura today.Prime Minister Manmohan Singh, who appealed to states to forego a part of their revenues from petro products, today wrote to his colleagues, asking them to take austerity steps.

The appeal was followed by cut in sales tax on LPG by the Congress-ruled Delhi government, on diesel by DMK-ruled Tamil Nadu and on petrol and diesel by the NDA government in Bihar. The Left-ruled West Bengal government has already slashed sales tax on petrol and diesel by up to five per cent giving a relief of Rs 2.12 and Rs 1.38 a litre on the two fuels respectively. Uttar Pradesh Chief Minister Mayawati threatened to launch an agitation against the price hike, saying tax cut by states was not a permanent solution.

Reducing Sales Tax Rates on Petro Products - June 6, 2008

State Finance Ministers are scheduled to meet on June 16 under the aegis of the Empowered Committee of State Finance Ministers on Value Added Tax (VAT). The State Finance Ministers is likely to discuss the sales tax rates on petrol and diesel in the wake the Prime Minister''s appeal to States to look at reducing sales tax rates on petro products.

Consumer Price Index - June 5, 2008.

The all-India average consumer price index for industrial workers (base 2001=100) rose to 138 in April from 137 in the previous month. It stood at 135 in February.

The Indian Rupee Lost 17 Paise - June 5, 2008

The Indian rupee lost 17 paise at 42।77/78 against the greenback on Wednesday after failing to hold the initial surge as meltdown in stock markets raised fears of capital outflows। At the Interbank Foreign Exchange (forex) market, the domestic unit resumed stronger at 42.58/59 and later moved in a range of 42.53 and 42.80 during the day. It had closed at 42.60/61 a dollar

Forex dealers attributed initial surge in the local currency to fairly heavy dollar selling by custodial banks in the face of slow demand from oil companies.

They said a sharp fall in domestic stocks after the government raised the petrol and diesel prices by Rs 5 and 3 a litre respectively weighed heavily on the rupee sentiment.

Analysts said fuel price hike is expected to push up inflation further and in turn will have adverse impact on the rupee as high inflation is likely to put pressure on equity markets affecting the capital inflows, key driver of the local currency. Heavy portfolio inflows last year had helped the rupee to surge by more than 12 per cent.

Rupee Dips By 20 Paise Against US Dollar - June 4, 2008

The rupee lost 20 paise at 42.60/61 against the greenback on June 3 on sustained pull-out by foreign funds from equity markets and on some dollar buying by importers. At the Interbank Foreign Exchange (Forex) market, the local unit opened lower at 42.45/47 a dollar from Monday''s close of 42.40/41. The domestic unit moved down further to a low of 42.64 before concluding the day at 42.60/61.

Forex dealers said fears of further rise in inflation on imminent fuel price hike pushed the rupee downwards.Foreign Institutional Investors (FIIs,) the main driving force behind the rupee''s rally in the last year, remained net sellers in last couple of weeks and they pulled out over $3.5 billion in this calender year so far, ultimately putting pressure on the rupee. Dealers also attributed fall in the rupee to weak Asian markets. Most of the Asian indices were down by 0.6 per cent to 1.8 per cent.

Centre Sends SEZ Ball Back In Goa''s Court - June 4, 2008

The Centre has refused to denotify three special economic zones in Goa that had already been approved and notified.Last December, Goa decided to scrap SEZs after widespread protests.

In a letter to the state government, the Commerce Ministry says there''s no provision to denotify these SEZs and advises that the state hold discussions with the developers to reach an amicable settlement.Goa Chief Minister Digambar Kamat has told NDTV that they will decide on the future course of action soon. Congress'' stand comes in contradiction to its earlier view wherein Sardinha had said that Goa can have two to three SEZs

India Tops US In Job Opportunities - June 4, 2008

For students graduating this year, India is seen as having the most job opportunities, with the US a close second, a study released on Tuesday by Accenture said. While nearly half (46 per cent) of Indian respondents are concerned that the weakening economy will affect their job search, they are far less concerned about the weakening economy than university graduates worldwide (63 per cent), an Accenture release said.

The study, based on a global survey of 286 graduating students in India and a total of 2,464 in eight countries, found that 87 per cent of India university seniors have started looking for a job. However, only half of the India graduating students have already found a job.Engineering as well as computers and math are the top professions chosen by the Indian graduates, where technology consulting, communications, or electronics and high tech are the preferred industry/sector for work.Despite concerns about a challenging job market, many Indian respondents would trade off some salary to work for a prestigious company to gain global experience. More Indian respondents expect to have a full-time job within three months of graduation compared to respondents overall and over half (53 per cent) of the India graduates will graduate without any student loans.

Exports Excel In April; Imports Get kostliyer - June 3, 2008

India began fiscal 2008-09 with an impressive 31.5 per cent growth in exports, but surge in oil prices pushed the import expansion to 36.6 per cent in April. Exports grew to $14.4 billion in April 2008-09, against $10.95 billion a year ago.

Imports, fuelled by a big rise in purchase of crude oil from abroad, went up to $24.27 billion against $17.76 billion. Trade deficit widened to $9.87 billion in the opening month of the current fiscal against $6.81 billion in the same period last year.

Oil imports amounted to $8.02 billion, showing a rise of 46.2 per cent over the corresponding month last year. The export performance in April was seen as commendable in the backdrop of the impact of strong rupee on exporters margins in 2007-08 when the overall growth was limited to 23.02 per cent. While rupee started losing ground since May, the positive impact on imports could be seen in the next few months.

Rupee Up On RBI Decision - June 3, 2008

The rupee appreciated against the dollar on June 2 on news that the Reserve Bank of India will provide liquidity to oil companies through the special open market operations. On May 30, the RBI announced that it would provide foreign currency to oil companies through public sector banks. On June 2, the rupee opened higher against the dollar, at 42.19/20 and touched a high of 42.15. But the gains made in the earlier part of the day were lost when the rupee started falling in tandem with the domestic equity index, said a bond dealer with a private bank. The rupee ended the day at 42.41/42, 20 paise higher from the previous close of 42.61/62. The forward premia came off their previous high with the six month closing at 1.69 per cent (2.26 per cent) and the one-year closing at 1.48 per cent (1.76 per cent).

India''s Economy Maintains 9% Growth

India''s economy grew by nine percent last year making it the world''s fastest-growing major economy after China. But the news is not all good. There are worries that high crude oil prices and runaway inflation will slow down growth. Anjana Pasricha has a report from New Delhi. India has pegged economic growth in the last fiscal year at a higher-than expected nine per cent. It is the third successive year that the economy has grown at this pace.The numbers should have brought cheer to the government. But Indian officials are not celebrating as they battle two emerging concerns, high global crude oil prices and rising inflation. Record high crude oil prices are hurting India significantly because it imports about 70 percent of its needs. The government heavily subsidizes prices of petroleum products. But public sector oil companies are now reeling under losses, and have warned they could face a cash crunch if retail prices are not raised.The government is likely to raise prices of gasoline soon, but there are concerns that the move will fuel inflation, which is already running high.India''s inflation rate surpassed eight percent last week, its highest level in four years.

CST Rate Slashed

The Centre on May 30 declared that Central sales tax (CST), a tax on inter-state sale of goods, would stand reduced to 2 per cent with effect from June 1 this year. A notification to this effect was issued on May 30 by the Union Finance Ministry. The notification of new CST rate of 2 per cent in place of the earlier 3 per cent is in accordance with the declaration made by the Union Finance Minister, Mr P. Chidambaram, in his budget speech in February this year. The rate of CST on interstate sale of goods to registered dealers (against Form-C) will now be the lower of 2 per cent and the rate of VAT or State Sales Tax applicable. This decrease forms a part of the roadmap for phasing out CST, to be completed by March 31, 2010. The Central Government and the Empowered Committee of State Finance Ministers have further accorded that the compensation for revenue loss to the States in any year arising from the lowering of CST will be limited to the proportionate loss based on the actual collection of CST in the relevant year.

Inflation surges to 8.1 pct

India''s wholesale price index increased 8.1 percent in the 12 months to May 17, above the previous week''s annual rise of 7.82 percent, government data showed on May 30. The rate was above a median forecast of 7.96 percent in a Reuters poll of analysts. Inflation for the week ended March 22 was revised upwards to 7.85 percent from 7.0 percent. The annual inflation rate was 5.30 percent during the corresponding week of the previous year. The wholesale price index is more closely watched than the consumer price index, which is published monthly, because it covers a higher number of products and is published weekly.