Govt May Announce Infra Package For Individual States - May 30, 2009

In order to attract the investments and to boost the economy, the government is planning a special infrastructure package for the special category states like Himachal Pradesh as well as Uttarakhand, Jammu and Kashmir and the northeastern states, which will be over and above the tax incentives. The package that might be announced in the Union Budget, which may likely to include 2-3 railway projects for Himachal Pradesh and Uttarakhand.

Moreover, there might be an up gradation of road infrastructure in all the special category states and distribution of power could be offered to private players through the franchisee route.

Govt Plans Three Public Division Banks Toward Strike - May 30, 2009

The government plans to allow three public sector banks- United Bank of India as well as Dena Bank and Bank of Maharashtra to tap markets in order to boost their capital base so that they can lend more. In order to boost the capital base, the government will infuse around Rs 1,700 crore in the paid-up equity capital of these banks by the end of this fiscal. For the capital infusion, the government has already worked out a rough estimate. While UBI will be allocated Rs 700 crore while the rest Rs 1,000 crore will be distributed between Dena and Bank of Maharashtra.

The government may raise capital in the tier-I category though various instruments in two tranches. However, there is still some gap left even after the government''s capital infusion. Therefore all options are evaluated including the public issue.

The three public sector banks may also be allowed to raise money through other methods, such as qualified institutional placements, if the market scenario doesn''t improve soon.

Earlier, Bank of India had raised Rs 1,360 crore through issue of 3.78 crore shares at a price of Rs 360 per share through QIP in 2007.

Currently, United bank of India (UBI) is wholly owned by the government, while in Maharashtra Bank, the government holds 76% stake and in Dena bank it holds 51% stake. However, the government will continue to hold a majority stake in all public sector banks.

Disinvestments Process Possible To Embark On Almost Immediately - May 29, 2009

The forthcoming budget, which is expected to focus on aam aadmi, may also announce some stake sale in PSUs as well as steps that would give a boost to economic reforms. The Finance Minister Pranab Mukherjee seems to have made up his mind on how and when to divest the stake in the government companies. Perhaps some kind of strategy seems to be emerging on disinvestment of government stake in public sector units (PSUs).

Moreover, the process may be kickstarted as early as the Budget after Prime Minister Manmohan Singh told reporters that in the budget, the disinvestment may find some place.

However, a clear political consensus is yet to arrive on disinvestment and the government may have to do a balancing act.

Before the government, few disinvestments are seemingly a strong preference for profit making PSUs to get political accolades but the loss making units will not be shut down.

Besides, NHPC and OIL India IPOs will be the test cases with NHPC IPO expected to hit the market around September.

However, the government will have to play a balancing act at any given time as it tries to go ahead with disinvestment and filling the national investment fund.

UPA Focus On Top Of Refreshing Financial System - May 29, 2009

New Delhi: For Pranab Mukherjee, the new Finance Minster, the first priority is to get the economy back on rails, however the fiscal consolidation can happen later. Pranab Mukherjee, in his first statement to the media gives emphasis on boosting the economy, which comes first and if so required, the fiscal situation can take a back seat for the time being. These are signs that point to more stimulus in the upcoming budget.

Reviving the growth momentum is the top most priority of the government. The mandate of the people has provided that booster dose has led to a widespread feel-good sentiment. I am aware that we need to rapidly build on that with concrete steps, which we shall do, he said.

He also added we are committed to restoring growth and employment and that would not have been possible without increased spending funded by incremental borrowing. This would need to be further continued in 2009-10.

Meanwhile, he is also quite optimistic that the budget would be passed by July end, which will also carry the broad outline of the stimulus. Now the focus is the ''aam aadmi'' and the coming budget will capture this mood.

Rupee Locks Of Hair Superior By Means Of Paise - May 29, 2009

Mumbai: The rupee on May 28 closed stronger by ten paise at 47.60/62 against the dollar backed by the firm equity markets amid sustained capital inflows. The rupee initially hit the intra-day low of 48.12 after trading resumed this morning on heavy dollar demand from oil refiners as well as importers.

At the Interbank Foreign Exchange (forex) market, the rupee moved widely in a range of 48.12 and 47.59 during the day after resuming weaker at 48.05/06 a dollar from its previous close of 47.70/72 a dollar.

However, the rupee drew support from the strong equity markets, with the BSE Sensex gaining 186 points or 1.32 per cent.

Meanwhile, the Reserve Bank of India (RBI) fixed the reference rate for the dollar at Rs 47.83 while for the euro at Rs 66.16. The rupee premiums on the forward dollar closed marginally lower on fresh receiving by the exporters.

The benchmark six-month forward dollar premium payable in November closed at 68-70 paise, slightly lower from the 71-73 paise on Wednesday while the far-forwards maturing in May ended at 113-115 paise.

However, in cross-currency trade, the rupee recovered against the pound sterling to conclude the day at Rs 75.95/97 as against previous closing level of 76.11/13, and hardened further against the euro to Rs 66.05/07 from Rs 66.27/29 previously.

UPA Prepares Position In Favor Of Labour Reforms - May 28, 2009

As the Union budget is scheduled in the fist week of July, the Planning Commission is looking at the need for labour reform which could help unshackle the growth for the industry. There will be revision of Industrial Disputes Act, 1947, Contract Labour Act, 1970 and Trade Union Act, 1926 as a part of change. However, the proposed changes to be made to these laws in consultation with industry as well as trade unions.

The changed labour laws will meet the industry''s long standing demand to hire and fire workers in sync with business cycles. Then the permanent employees can be hired as contract labour while the weekly working hours will be increased to 60 from 48.

Industry leaders say that since services now account for nearly 55 per cent of India''s economy, therefore it is essential for a change in laws. The Chief Economic Advisor Arvind Virmani had submitted a report to the government three years ago, recommending the changes required in the labour laws.

The first steps of changes in labour laws are being taken. Andhra Pradesh government has already amended the contract labour law and moreover has relaxed the employment of contract workers. The labour reforms are also part of the wishlist of industry association FICCI. Besides this, CII, India''s largest industry association Confrederation of Indian Industry, has also demanded relaxation in labour laws.

Financial Statement Within Initial Week Of July: Pranab - May 28, 2009

Pranab Mukherjee, Finance Minister to present the union budget for 2009-10 in the first week of July and get it approved by July 31 through the vote on account. However, if the budget fails to be approved before July 31, then the government will have to seek another vote on account. The budget, which will spell out the issues and concerns about the economy, would address the need for the growth momentum which is hit by the global financial crisis. The minister also said that te budget would also focus on the sectors, which are hit badly by the global financial crisis.

The focus of the government policies and reforms will be ''Aam Admi'' , Mukherjee said and added that the manifesto proposed to increase the minimum wages under the NREGA scheme to Rs 100 per day.

Meanwhile he also said that the issue of providing food security would get top priority. Regarding the need for the stimulus package to boost the economy, Mukherjee said that the government since December last had already announced three packages. Moreover he said that the problems of crisis-hit sectors like textiles, leather and gems and jewellery will be addressed in the budget.

Rupee Surges Paise In Opposition To Money - May 28, 2009

Mumbai: The Indian rupee on Wednesday appreciated by 22 paise to close at 47.70/72 per dollar on the back of expectations of heavy capital inflows after government promised to push economic reforms and ease the credit costs. The rupee opened higher at Rs 47.55/56 per dollar as against the previous''s closing level of Rs 47.92/93 before concluding at Rs 47.70/72 per dollar. The rupee moved in a range of Rs 47.51 and Rs 47.80.

The global oil prices rose to $63 per barrel on the back of better-than-expected consumer-confidence data boosted hopes of economy recovery. According to the dealers, huge rally in stock market was the main reason for the appreciation in rupee against the US dollar. The benchmark Sensex on Wednesday surged 520.41 points or 3.83 per cent after Finance Minister Pranab Mukherjee promised to push for lower credit costs and higher infrastructure spending.

The Reserve Bank of India (RBI) fixed the reference rate for the US dollar at Rs 47.67 and for euro at Rs 66.42. The rupee premiums on the forward dollar ruled steady in the absence of market-moving factors.

Finmin To Chalk Out Plans For Public Offerings Abroad - May 27, 2009

The finance ministry is working on plans to chalk out a foreign road show calendar that aimed at attracting institutional investors to initial public offerings (IPO) and proposed follow-on public offerings (FPOs) of state-run firms- Oil India (OIL) and NHPC. The road show for OIL, led by inter ministerial group is expected to start in August, followed by NHPC.

OIL is planning an IPO of Rs 1,300-crore while NHPC plans to raise an estimated Rs 2,500 crore. The government also wants to offload a stake of 10% in OIL while 5% in NHPC.

Both NHPC as well as OIL are expected to be listed before end of September, before the lapse of the regulatory approvals by Sebi. The government holds a 98.13% stake in OIL while NHPC is a 100% state-owned company.

The lead managers for OIL IPO are HSBC as well as Citigroup and Morgan Stanley while for NHPC it has SBI Capital Markets, Kotak Mahindra Capital Company and Enam Securities Private as its lead managers.

The team for road shows will include board members, representatives from respective administrative ministries, and finance ministry officials. The government is expected to tap foreign investors for many of the upcoming IPOs and FPOs.

Disinvestments Development Picks Positive Energy Over - May 26, 2009

After Congress led UPA government won the decisive mandate in the recently held general elections without the support of communist parties, the talk of disinvestments in government owned firms is doing the rounds again. One of the few options before the UPA regime is the offloading of government''s stakes in its profit making companies in order to deal with the fiscal deficit as well fill its coffers but also earn kudos from India inc and from small retail investors.

The government is already having two proposals in the pipeline- oil and gas explorer Oil India and National Hydropower Corporation, which are waiting to hit their respective issues in the primary market.

There are 60 plus profitable PSUs which are to be listed. The focus on these 60 companies and plan 8 to 10 disinvestment over the year for the next five years. The government holdings in listed state-owned companies are estimated at over Rs 800,000 crore. A 10% stake dilution in top ten PSUs in terms of market valuation itself can bring in a whopping Rs 90,000 crore.

Pranab Meets Senior Officials To Discuss Budget - May 25, 2009

After being allocated as the Finance Minister portfolio, Pranab Mukherjee seemed to have held an informal meeting with the senior officials in the ministry and discussed the issues relating to the Union Budget preparation. The Finance Secretary Ashok Chawla as well as Chief Economic Advisor Arvind Virmani met Mukherjee on Sunday. Mr. Mukherjee is likely to take over the charge on Monday. According to sources, Mr. Mukherjee might convene a meeting of senior Finance Ministry officials on Monday.

After the first meeting of the new cabinet meet on Saturday, Mr. Mukherjee had expressed hope that the government would be able to present the Union Budget for FY 09-10 in due time to avoid uncertainties.

Regarding the economic scenario, he had said, "Indian economy is resilient, strong and we shall have to build up and come back to the growth track as early as possible.

We will be able to, I hope, present the budget in due time so that uncertainties can be avoided and time of spending can be renewed."

Mr. Mukherjee had presented an interim budget in February this year and had sought Parliament''s approval for the withdrawal of money from the consolidated fund only till July 31.

Priority Likely For A Reform-Oriented Budget - May 25, 2009

After a clear mandate for the congress led UPA government in the recently held general elections, Pranab Mukherjee is back at North Block as full-time Finance Minister of the UPA government. However, now the prime task of Mr. Mukherjee after assuming the charge on Monday would be to unveil a reform as well as a growth-oriented budget for the entire fiscal that aimed at putting back the economy on track which has been hit by the global financial crisis.

For Mr. Mukherjee the presentation of the budget would mark the completion of an unfinished task and an exercise in continuity as he had earlier hinted at the economic policies and specific programmes.

As the validity of the interim budget (vote-on-account) expiring on July 31 technically, so the government has to ensure that the parliament approved the budget by that date so as to facilitate further spending from August 1. Otherwise, yet another vote-on-account for a shorter term would be essential.

Speaking to the media here after the allocation of portfolios, he said: "[The] Indian economy is resilient, strong and we shall have to build up and come back to the growth track as early as possible.

We will be able to, I hope, present the budget in due time so that uncertainties can be avoided and time of spending can be renewed…We will address all major issues. Various efforts will be made to insulate the Indian economy from the adverse impact of financial meltdown."

Less Room Used For Strain Cuts Into Financial Statement: Official - May 23, 2009

The Finance Ministry has told industry to not to expect any major fiscal sops in the Budget to be presented by the new UPA government. In pre-Budget consultations, senior Finance Ministry officials conveyed the government''s disappointment to industry for not passing to consumers the benefit of excise and service tax cuts announced in December and January, a chamber official said.

Revenue Secretary P V Bhide had convened separate meetings with industry bodies - CII, FICCI and Assocham - earlier this month.

While, the three chambers presented wish lists to the Finance Ministry, they were told that new Finance Minister would not have much headroom for any more fiscal incentives which the industry wants for boosting the economic activity.

The fiscal deficit for 2009-10 is pegged at Rs 3,32,835 crore, 5.5 per cent of the GDP. The revenue was impacted in the last fiscal as industrial production fell.

Revival As A Result Of Closing Year Stages: Subbarao - May 23, 2009

The economy may witness revival later this year with fiscal stimuli work its way through. However, such a recovery can sustain only if the government returns to fiscal discipline, according to Duvvuri Subbarao. The RBI governor is holding on to the 6 per cent GDP growth estimate for this year, based on the central bank''s balance of evaluation in the weeks following the April monetary policy.

The new government, the RBI governor implied, might wish to carefully weigh the benefits of another fiscal stimulus with the cost of a rising fiscal deficit. Mr Subbarao was speaking for the first time since the dramatic victory of the Congress-led UPA government on May 16 which promises a stable government for the next five years.

Rupee Up Paise Going On Physically Powerful Inflows - May 23, 2009

The rupee reported a strong return due to inflows and weakening of dollar against all major currencies. On May 22, the rupee opened at 47 but soon dropped to the day''s low of 47.22 as importers bought dollars. However, with the gain in Sensex, the rupee also gained and closed at 47.10, higher by about 30 paise from the previous close of 47.40. There were some stray deals done at 46.98 levels. In the overseas market, the dollar weakened against all major currencies.

Next week, the rupee will strengthen depending on the inflows, but the month-end dollar demand from importers and oil companies could arrest the rupee''s high gains, the dealer said. In case the rupee moves up too sharply, the RBI may intervene to protect exporters'' interests.

Rupee Continued To Be Gaining Against The Dollar - May 22, 2009

The rupee continued to be gaining against the dollar on the back of inflows from foreign investors and domestic companies. The rupee opened at 47.50 and closed at 47.40, as against the previous close of 47.48. In the overseas market, the dollar was weak against other currencies in the initial session but later started strengthening against the pound.

Moreover, in the forward premia market, there was movement of barely 2 paise, with the six-month closing at 2.90 per cent (2.88 per cent) and the one-year at 2.35 per cent (2.36 per cent).

Bond Prices Lose Your Balance By Paise - May 22, 2009

The bond prices fell by around 50 paise on May 21 ahead of the Rs 15,000-crore government securities auction. The cut-off price for the buyback of government securities, which was below expectations, dampened the market sentiments. The trading volumes on the order matching system were at Rs 5,770 crore (Rs 5,500 crore). The 6.05 per cent-10-year-2019 paper opened at Rs 97.6 (6.38 per cent YTM) and shot up to touch a high of Rs 97.89 (6.34 per cent YTM).

It finally closed at the day''s low of Rs 97.29 (6.42 per cent YTM) against the previous close of Rs 97.81 (6.35 per cent YTM). Moreover, the 7.56 per cent-2014 paper opened at Rs 106.25 (6.18 per cent YTM) and closed at Rs 106.05 (6.23 per cent YTM).

India Direct Tax Receipt 8.3 Per Cent Higher - May 22, 2009

India''s direct tax receipts were 8.33 per cent higher to Rs.3.38 lakh crore in 2008-09, the finance ministry said on Thursday. However the direct tax collections dropped Rs 6,000 crore short of the target of Rs 3.45 lakh crore for 2008-09 fiscal. The fall is in spite of the decreasing the collection target by the government from Rs 3.64 lakh crore to Rs 3.45 lakh crore to allow for the dent the economic crisis could make on its revenues, the statement said.

According to the ministry, corporate tax collections were 10.8 per cent up to Rs 2.14 lakh crore last fiscal. In addition, individual income tax receipts were 9.1 per cent higher at Rs 1.24 lakh crore.

"Despite economic slow-down and substantial relief to non-corporate taxpayers, direct tax collections exceeded the previous year''s collection by about Rs 26,000 crore," the ministry statement said.

Corporate tax deducted at source reported 35.4 per cent rise to Rs 61,683 crore, compared to Rs 45,450 crore the previous fiscal.

India Inflation At 0.61 Per Cent On May - May 21, 2009

India''s inflation hovers near the three decade low as its wholesale price index shot up 0.61 percent in the 12 months to May 9, 2009 as against previous week''s annual rise of 0.48 percent, government data showed on Thursday. The annual inflation rate was 8.57 percent during the corresponding week of the previous year.

According to data released by the commerce and industry ministry showed that the index for primary articles rose 0.5 per cent during the week and that for manufactured products was up 0.1 per cent, while the index for fuels remained unchanged at 323.7.

Meanwhile, the inflation figure for week-ended March 14 has been revised to 0.71 per cent as against 0.27 per cent (provisional).

Rupee Surges As A Result Of Paise To End At 47.47 - May 21, 2009

The rupee surged further by 31 paise to 47.47/48 against the dollar on May 20 due to fair demand of the dollar by the exporters in the face of sustained capital inflows into equity. The rupee sentiment was also boosted due to the encouraging growth outlook after the Congress-led UPA''s decisive victory in the general elections, raising hopes of a stable government.

The rupee has gained 4.62 per cent in the four-day winning streak on consistent portfolio inflows. In active trade at Interbank Foreign Exchange (forex) market, the rupee moved in a range of 47.46 and 47.95 after resuming weak at 47.90/91 a dollar from its previous close of 47.78/80 a dollar.

The Indian benchmark Sensex on Wednesday ended lower by 241 points or 1.69 per cent. The RBI fixed the reference rate for the US dollar at Rs 47.71 while for the euro at Rs 64.86. Moreover, the benchmark six-month forward dollar premium payable in October closed at 65-67 paise, up from 56-1/2-58-1/2 paise on Tuesday and the far-forwards maturing in April also closed up at 106-108 paise as against 96-98 paise previously.

Liquidity Starts Flowing Toward India Inc - May 21, 2009

Liquidity started flowing to India Inc from banks after a drought of around six month. Now companies are finding some takers for debt and equity issues. Banks are gradually discarding their aversion to financing new projects and foreign investors are heading back to India. However, banks are seen still biased towards government bonds in spite of continued growth in deposits.

Private and the foreign banks are yet to increase lending in a big way as public sector banks have already started financing projects.

After reporting a drop of Rs 25,266 in credit in the last fortnight of April, banks have lent Rs 5,881 crore to companies, individuals and other businesses during the fortnight ended May 8, according to the newest figures released by the Reserve Bank of India.

Total loans amounted to Rs 27,52,056 crore as on May 8. However, the loan growth in the corresponding fortnight last year was much higher at Rs 17,500 crore.

Manmohan Singh Says New Government Revive Growth - May 20, 2009

Dr Manmohan Singh who is set to become Prime Minister of India for the second term after a thumping victory of the Congress-led UPA government in election on Tuesday, 19 May 2009, said the new government will revive economic growth and make it even more inclusive. Dr Singh said daunting challenges lay ahead as the global economy is passing through difficult times.

The Congress party today elected Dr Singh as leader of its parliamentary party today, a formal stamp for Singh to take charge as prime minister for a second consecutive term.

A clear mandate for the Congress-led United Progressive Alliance (UPA) has boosted hopes a strong coalition would be able to push through economic reforms that would boost foreign investment.

The Congress-led UPA government got a near-majority mandate in the recently concluded parliamentary election. The strong performance of UPA in election defied predictions of a tight election and was only about 11 seats short of an majority from the 543 seats at stake. Congress' alliance took 261 seats, sweeping aside its nearest rival, the bloc led by the Hindu-nationalist Bharatiya Janata Party (BJP), which won only 159 combined.

Congress, which alone won 205 seats, needs a handful of partners to reach the 272 seats needed to take power, and is expected to seek the support of more smaller parties or independents.

Surging Equities Hit Gold Prices - May 20, 2009

The gold prices dropped for the third straight day on May 19 as the investors eyes more on stocks and the rupee rather than the precious metal. The gold fell further by Rs 270 at Rs 14,380 per 10 gram in the bullion market after a whopping loss of Rs 430 in the last two sessions. On the other hand, the silver also followed the same trend as the prices declined by Rs 200 at Rs 21,800 per kg due to reduced offtake.

The gold prices fell sharply by Rs 380 per 10 gram following a surge in the stock markets due to the return of the UPA to power.

The metal fell to 918 dollar in Asian region from 930 dollar in the US markets. The World Gold Council had said that the gold imports of India in 2008 dropped 14 per cent to 660.2 tonnes as higher gold prices and volatility hurt demand. The standard gold and ornaments declined by Rs 270 each at Rs 14,380 and Rs 14,230 per 10 gram, respectively. Moreover, the sovereign was also dipped by Rs 100 at Rs 12,300 per piece of eight gram.

The silver ready also dropped by Rs 200 at Rs 21,800 per kg and the weekly-based delivery by Rs 450 at Rs 21,700 per kg. The silver coins slipped by Rs 100 at Rs 28,900 for buying while Rs 29,000 for selling of 100 pieces.

UPA Return To Push Financial Sector Reforms - May 20, 2009

After a clear mandate of the Congress led UPA government, the financial sector reforms are likely to get a boost in the near future, which was put on the backburner due to opposition from the Left parties. The government is already having the pension as well as insurance and banking sector reforms before them and it is now up to the government to take a call on these.

According to HDFC Chairman Deepak Parekh, less dependence on allies will help to form a stable government the continuity of UPA-government is expected to push economic reforms. The government needs to opt for disinvestment in those PSU companies where its holding is more than 51 per cent to deal with the huge fiscal deficits, Parekh said.

RBI Survey Of Forecasters Predicts 5.7 Per Cent GDP - May 16, 2009

The Reserve Bank of India released results of quarterly Survey of professional forecasters on major macroeconomic indicators of medium term economic developments on 14 May 2009. The survey covered component-wise detailed forecasts of GDP growth, inflation, savings, capital formation, consumption expenditure, export, import, interest rates, money supply, credit growth, stock market movements, corporate profit.

Forecasters have revised their real GDP growth rate downwards to 6.6% in 2008-09 from 6.8% in the last survey. The forecast for the year 2009-10 has also been revised to 5.7% from 6.0% in the last survey. The forecasters are asked to assign the probabilities to the possibility that year over year real GDP growth will fall into various ranges.

Real GDP growth forecast originating from agriculture for the year 2008-09 has been revised downwards to 1.6% from 3% in the earlier survey and for the industrial sector it was revised downwards from 4.9 % in the last survey to 4.1%. For the services sector, however, the growth forecast has been revised upwards to 9.3 % from 9 % in the last survey.

For the year 2009-10, the forecast for industry has been revised downwards from 5 % in the last survey to 4.1 % in the current survey. The forecasts for agriculture and services sector have been kept at the same level of 3 % and 7.5 % respectively.

On a flip side the proportion of domestic saving to GDP is indicated to be 35.3 % in 2008-09, revised upwards from 33 % in the last survey. Forecasters expect gross domestic capital formation to contribute 37.5 % of real GDP in 2008-09 (34.9 % in last survey), while contribution of gross fixed capital formation is expected to be 33.7 % (revised upwards from 32 % in the last survey).

The forecasters have predicted private final consumption expenditure to grow at the rate of 6.5 %, down from earlier forecast of 6.8 % in the last survey.

Broad money (M3) growth is revised downwards to 17.5 % in 2009-10 from the earlier forecast of 18.3 %. In 2009-10, bank credit is expected to grow at the rate of 16 % against its previous forecast of 20 %.

Central Government fiscal deficit is expected to widen to 6.2 % of GDP in 2008-09, whereas the combined gross fiscal deficit is placed at 9.8 %. Both these figures have been revised upwards from 5 % and 8 %, respectively, in the last survey.

Forecasters' median estimates for WPI inflation on a year over year basis in the first quarter of 2009-10 is revised downwards to (-) 1.4 % against the earlier forecast of 2.4 %. According to forecasters have assigned highest 40 % chance that inflation will be in the range of 5-5.9 % in 2009-10.

US Observes India A Hub Of Regional Prosperity - May 16, 2009

According to a top US diplomat who has served in New Delhi, India not only provides vital export opportunities to American companies but has the prospective to become the hub of prosperity in Asia. "India, with its vibrant democracy and rapidly expanding economy, can be an anchor of stability and opportunity for South and Central Asia," said Robert O Blake, a former deputy chief of mission at the US embassy in New Delhi.

"With a massive and expanding middle class, and an economy projected to grow at five percent this year, India can be a hub for regional prosperity," Blake told his confirmation hearing as the new US point man for South and Central Asia.

Noting that US exports to India increased from $5 billion in 2003 to almost $19 billion in 2008, he told the Senate Foreign Relations Committee that India also offered several opportunities where US can enhance its regional integration.

RBI To Open No Add-On Account For Households - May 15, 2009

The Reserve Bank of India is planning to cover all households having any photo ID cards for opening ''no frills account'' by March next year. The Central bank targets at least 50 per cent of these accounts to be made operational by encouraging the account holders to avail credit as well as the other benefits. The bank targets around 8,000 villages with at least 2,000 population to bring the households under the scheme.

Moreover, RBI is planning to initiate a programme to impart financial literacy to students to enable them understand the financial system. RBI will be launching the project in the Karnataka.

Gold Nearing 15,000 Mark On Strong Buying - May 15, 2009

The gold prices on Wednesday closed in on the crucial Rs 15,000-mark by gaining Rs 140 per 10 gram in the bullion market in New Delhi due to hectic buying by stockists as well as jewellery fabricators amid firming global trends. The gold surged Rs 140 at Rs 14,970 per 10 gram while the silver prices shot up Rs 300 at Rs 22,600 a kg.

The marketmen said that the repots of gold rising in London to six week high also boosted he sentiments. The metal gained in London after the US dollar declined, spurring demand for gold as a hedge against inflation.

The standard gold and ornaments shot up Rs 140 each to Rs 14,970 and Rs 14,820 per 10 gram respectively and sovereign grew by Rs 150 to Rs 12,350 per piece of 8 gram.

On the other hand, the silver ready inched up by Rs 300 to Rs 22,600 per kg and weekly-based delivery by Rs 560 to Rs 23,150 per kg respectively. The silver coins also gained Rs 100 to Rs 29,100 for buying while Rs 29,200 for selling of 100 pieces.

Bond Yields Grew All Over Again - May 15, 2009

The yields on government securities grew on Thursday. The yield on the benchmark 10-year paper shot up 7 basis points to 6.39%. The bonds were also under pressure after the exit polls that signalled neither of the two main political alliances will have enough votes to form a government without the support of smaller parties.

RBI has raised Rs 12,000 crore as a part of the government''s record borrowing programme. RBI sold Rs 8,000 crore of new benchmark five-year notes at a cut-off yield of 6.07% and Rs 4,000 crore of 8.2% notes due in 2022 at a yield of 7.35%.

Reserve Bank Of India Deputy Governor Has Raised The Concern - May 12, 2009

The outgoing Reserve Bank of India's(RBI) Deputy Governor has raised the concern for current global economy outlook. At the outset of the Indian Merchants Chamber's conference on 11 May 2009 ,eminent economist Dr Shankar Acharya has indicated 2009 as a painful year for global economy. The current global meltdown is the outcome of the housing bubble generated in US and Europe along with the easy monetary policy, which flow liquidity in economy.

Overall weak policy regulation has somehow responsible to the current financial meltdown, he added. Outlook for the year to come is not optimistic.

Already leading global economy moderators like IMF and World Bank has reduced growth objective and expected further fall. One of the major reason could be the longer recovery in industrial countries. At the same time major financial institutions in USA are still under stress and their capability to capture new risk is quite lower, added by Dr Acharya.

Deputy Governor of RBI, Dr Mohan had similar view. He said, the frail monetary policy led to the global financial crisis. Capital flows into emerging markets were seen negative in 2009, he added. On the issue of the Indian banking sector, he remarks that he had not seen any banking problem in India. Non-performing assets have not upped sharply, despite the high credit growth that we saw in 2004-07, he added.

Volatile monetary policy has impact on exchange rate , capital flow ,and stock market. The lesson from the current global crises is how to conduct monetary policy in different countries. According to the Dr Mohan, in good time Capital adequacy ratio should maintain at high level, which will support financial institutions in bad time.

Industrial Production Shrinks By 2.3 Per Cent In Protest Rally - May 12, 2009

India''s industrial production fell 2.3 per cent in March as against a rise of 5.5 per cent during the corresponding month in 2008, mainly due to weak performance by the manufacturing sector, the output of which contracted by 3.3 per cent during March. The sector, which accounts for almost 80 per cent of the index, registered a growth of 5.7 per cent during the same month in 2008.

For 2008-09, industrial output growth was 2.4 per cent, which was down from a high of 8.5 per cent during the previous financial year, according to the Index of Industrial Production (IIP) figures released by the government today.

The mining sector too reported dismal growth of 0.4 per cent during March as against an increase of 4.9 per cent. However, the power generation rose by 6.3 per cent during the month as compared to 3.7 per cent during the corresponding period in 2008.

Indian Rupee Going On Submit Unfortunate Gains Near Reduce - May 12, 2009

Mumbai: Moving in tandem with the local equity markets, the Indian rupee on Monday surrendered early gains to fall from the high of 49.05, to close 22 paise down at 49.50/52 against the dollar. In active trade at the Interbank Foreign Exchange (Forex) market, the rupee resumed higher at 49.06/08 a dollar from its last weekend''s close of 49.28/29 per dollar.

It touched a high of 49.05, level in morning deals as the Sensex was up by over 150 points in early trade. However, a sudden sell-off in equities due to the uncertainty over the Lok Sabha election results, due on May 16, weighed on the rupee and it fell to a low of 49.52 before concluding the day at 49.50/52 per dollar. The Sensex closed lower by 193.44 points or 1.63 per cent while, the dollar demand from importers, mainly oil refiners, also dampened rupee sentiment.

Money Supply Recorded 21 Per Cent Growth - May 11, 2009

As per the recent Weekly statistical supplement released by RBI, The broad money recorded 21% annual growth rate as on 24 April 2009 compared with 17.3% a year ago. The annual growth rate in time deposit with bank was 23.7% as on 24 April 2009 compared with 23% last year. However bank credit to commercial sector recorded lower growth rate in 2008-09.

The annual growth rate was 17.7% as on 24 April 2009 compared with 21.5% recorded a year ago. The global slowdown has been creating worrisome for the domestic industry and overall weak global economy outlook has been adding stress on funding cost.

The apex bank of India has cut the key rate of interest with regular intervals from September 2008 to till date. However the measures will take time to perform. The RBI has projected 17% growth in money supply for the year 2009-10.

The annual growth rate in net foreign exchange assets of banking sector recorded 0.8% negative growth as on 24 April 2009 compared with 48% surged last year.

Developed Part Arrangement Of Various Symbols To Recovery - May 11, 2009

The manufacturing sector, which has been drastically hit by the global economic downturn, is now showing some signs of recovery with key segments like the fertiliser, steel and two-wheelers, which are now coming back to moderate growth from negative trends between the third and fourth quarter of 2008-09, according to a CII-ASCON survey.

Moreover, the Petrochemical products like LDPE and HDPE, pig iron are also among the sectors which are returning into a positive territory, the survey said.

In the fiscal 2008-09, out of the sectors covered by the survey, around one-fourth of them showed high growth. But it was only about 16 per cent of the sector which showed high growth in the previous two quarters.

The sectors that are reporting high growth are asbestos as well as power cables, switch gears, capacitors and industrial gases, the CII-Ascon survey said.

Giant Operate Shortage In The Face Of Anti-Dumping Dealings - May 11, 2009

The trade deficit of India stood at a whopping $119 bn in the fiscal 2008-09. The rise in the measures to stop the dumping of goods failed to contain the imports for the larger parts.

With the expansion of over 14 per cent in imports would show India as one of the most liberal countries for inward trade, New Delhi leads for initiation of anti-dumping measures in the second-half of calendar 2008 par adoxically conveys an opposite impression.

The highest number of anti-dumping investigations initiated by India between July and December, 2008 stood at 42 followed by Brazil and China, according to a WTO report. In the financial years 2008-09, the imports surged to $287.75 billion for the financial year 200 8-09 against exports of $168 billion.

Bank Deposit Rates Dropped Below The Small Savings - May 09, 2009

The interest rates on long-term deposits offered by public sector banks have come down below the crucial 8% mark, which is the minimum rate on various small savings schemes run by the government. The prevailing term deposits of 3-5 years now is 7.25-7.75%, down from nearly double-digit rates offered up to December 2008. The ten public sector banks, including State Bank of India now offer these rates. This indicates that the banks can now offer lending below 10% to most industries.

The savings of Indian households was Rs 7,34,653 crore in 2007-08 out of of which Rs 4,06,630 crore is in bank deposits, according to the latest RBI figures. The bank deposits as defined by RBI includes cooperative and non-credit societies. The time deposits of scheduled commercial banks grew by Rs 31,495 crore during the fortnight ended April 24 while on the other hand, the demand deposits dropped by Rs 9,538 crore in the same period, as the RBI''s latest data. The total outstanding bank deposits stood at Rs 39,23,000 crore as on April 24.

Exim Bank Of India Extends Just Before Mozambique - May 09, 2009

In order to finance the rural electrification projects, Export-Import Bank of India (Exim Bank) said it has extended a $30-mn line of credit (LOC) to Mozambique and this is the fifth LoC extended by Exim Bank to Mozambique at the behest of the Government of India. The projects are in Gaza as well as Zambezia and Nampula, Exim Bank said in a statement.

The first LoC of $20 mn was extended in September 2004 to Mozambique while the second of $20 mn in August 2006, the third of $20 mn in August 2008 and the fourth of $25 mn in December 2008.

Under the LoCs, Exim Bank will reimburse 100 per cent of contract value to the Indian exporter upfront upon the shipment of goods.

Inflationary Pressures Non-Existent Here Approaching Weeks - May 09, 2009

By beating the general expectations, India''s wholesale price index continues to rise. The inflation rate has also rallied through April to stood at 0.7 per cent for the week ended April 25 after hitting a low of 0.18 per cent for the week ended April 4. The inflation rate declined for the eight consecutive week to stood at 0.27% for the week ended March 14.

"Inflationary pressures have waned around Asia amid a slowing economy. However, food prices in India have remained solid because of the government''s agricultural price guarantees. Despite cooling demand, food prices rose mildly during the week ended April 25 while energy prices were steady," said Sherman Chan, economist at Moody''s Economy.com.

Chan believes that in the coming weeks the overall inflationary pressures will likely remain almost nonexistent, with a considerable chance of the WPI soon declining year on year.

Inflation Rose Marginally To 0.70 Per Cent On April - May 08, 2009

The annual rate of inflation grew marginally to 0.7 per cent for the week ended April 25 as against 0.57 per cent the week before. The indices for manufactured products and primary articles rose 0.3 per cent and 0.2 per cent respectively. However, the index for fuel, power, light and lubricants remained unchanged at its previous week''s level of 323 (provisional).

The inflation rate based on official wholesale price index had dropped for eight consecutive weeks to 0.27 per cent for the week ended March 14 but it rose marginally to 0.31 percent for the week ended March 21. It then fell for the two consecutive weeks, before rising again for the next three weeks

Slowdown Hit Indo-Chine Trade Volumes Down 29 Per Cent - May 08, 2009

The trade between Indian and China has been strongly hit due to the economic slowdown that results in a drop of 29% in volume of trade since January, said Mr Peng Gang, Counsellor (Economic and Commercial), Chinese Embassy in India, in Kolkata. However, he expressed the hope that there would be sign of improvement in the second half of the current financial year.

"Trade volumes will start picking up soon as there are signs of revival in the economy following a series of measures being taken by the Government," Mr Gang said while speaking on the sidelines of a meeting on the 2nd South Asian Countries Commodity (SAAC) Fair.

As per his estimation the bilateral trade between Indian and China to grow by 20 per cent to reach $60 billion in 2009-10. Currently, the trade between the two countries stands at about $50 billion.

Tighter Secretarial Norm By Midpoint At Home 5 Years - May 08, 2009

The Comptroller and Auditor General of India (CAG) is looking at the option to move from cash to accrual basis within the next five years in order to change the way government accounts are presented. The accrual-based financial statements are expected to provide more appropriate financial performance''s presentation as well as position of the government.

The government currently follows the cash basis accounting, where the cash was recorded in the books only upon receiving it. However, it doesn''t consider the receivables. Under India''s constitutional provisions, the account of the Union and the states shall be kept in the way prescribed by CAG.

The accrual accounting system would be based on Indian Government Financial Reporting Standards (IGFRS) issued by the Government Accounting Standards Advisory Board (GASAB) of the CAG of India.

The CAG recently had held a conference on accrual basis accounting to deliberate on the issue of migration from cash to accrual basis accounting and it laid down the roadmap for migration process.

Govt, Realty Cos To Undertake Low Cost Housing In Rural Areas - May 06, 2009

ASSOCHAM has suggested the government and realty players to jointly undertake low cost housing projects in the rural areas where the shortage of houses is estimated more than 47.43 mn upto 2012.

According to ASSOCHAM report on Rural India, central government has spent Rs.189898.56 crore for constructing 171 lakh houses under the ''Indira Awaas Yojana"meaning that the cost per house comes as Rs.1,11,000.

However, the government could not achieve the desired results fully due to various problems like land availability, clearances by forest department, delay in release of funds and lack of basic amenities in the houses constructed.

Between FY2000-01 to FY2006-07, the government was able to achieve 99% of the physical target of construction of houses. However, the achievement rate fell to 51% in FY2007-08. Number of houses constructed in FY2007-08decreased to 10.9 lakh, from average 15 lakh in preceding three years.

ASSOCHAM President, Sajjan Jindal said in the report that there is a huge backlog of house requirement which needs to be fulfilled and suggested that the Indira Awaas Yojana Scheme under the umbrella of ''Bharta Nirman'' programme should be renovated for more effectiveness.

RBI Transfer In The Direction Of Govt, Eases Borrowing - May 06, 2009

The government of India in consultation with Reserve Bank of India decided to transfer Rs280 billion from the MSS cash account to the normal cash account of the Government of India on May 2, 2009, a move that would ease the pressure on record market borrowings planned for 2009/10.

RBI aims to move a total of Rs330 billion from the market stabilisation scheme (MSS) in this year. However, the outstanding amount under the MSS account was Rs427.73 billion on May 2, the RBI said. Moreover, it has also bought back federal bonds in recent weeks to ensure adequate investor appetite for new auctions.

RBI in early March had given Rs120 billion to the government from the MSS account in order to meet a sudden surge of borrowings in the closing weeks of the 2008/09 fiscal year.

Moreover, the Central bank has taken a series of measures to ensure the government''s net borrowing plan of Rs3.09 trillion in the fiscal year would go through smoothly without disrupting markets and sending yields shooting up.

Libor Dip May Cheer India Inc - May 06, 2009

The stock market cheerleaders have more reasons to rejoice. The three-month Libor (London Inter-Bank Offered Rate), an international benchmark interest rate used to price corporates loans has dipped below 1% for the first time on Tuesday and this is an indication that banks are more willing to lend. Corporate India may not only witness the softening of its interest costs on all foreign loans but could also find it easier to raise cheaper dollars to refinance the more expensive bridge loans.

However in the domestic arena, RBI in a move that could also lower interest rates on rupee loans, announced that it would close the second reverse repo window for accepting surplus fund from banks. With this, the local banks would now left with little options but to lend as much as Rs 40,000-50,000 crore. However, if they select to invest the surplus money in government or corporate bonds, it would lead to plummeting yields on these papers.

RBI from now onwards will conduct only one reverse repo in the morning while the afternoon reverse repo will be held only on reporting Fridays. But, it''s the drop in Libor that could have a more far-reaching impact on financial markets.

Government And Realtors To Undertake Low Cost Housing - May 05, 2009

As the India''s real estate sector struggling with the depressed demand due to the global recession and high cost of borrowing, industry body Assocham has suggested that the government and realty players should jointly undertake the projects of low cost houses of 47.43 million by 2012 in rural areas.

The chamber said the government has constructed 171 lakh houses with an expenditure of Rs 1,89,898.56 crore. However, the desired results under the scheme have not been fully achieved due to various issues like the land availability as well as clearances by the forest department, delay in release of funds and lack of basic amenities in the constructed houses, it said.

According to the Assocham President Sajjan Jindal, there is huge demand for low-cost houses in rural areas that needs to be fulfilled and recommended that the Indira Awaas Yojana Scheme, (IAY) under the umbrella of ''Bharta Nirman'' programme, should be restructured.

He also added that there is a strong case for private sector participation to bring in right technology for such types of houses and ensure fast completion of the projects.

Global Slump Would Further Hurt Abroad Sales By Indian Firms - May 05, 2009

India''s exports contracted by a third in March to $11.5 billion which is sixth straight fall and many of the analysts have a view that global economic slump would further hurt overseas sales by Indian firms in the month ahead.

Import shrunk by 34% to $15.56 billion in March''09 from a year earlier due to a slowdown in Asia''s third largest economy and volatile global crude prices Clc1, narrowing the trade deficit to $4 billion in March''09 from $6.32 billion a year ago.

India''s exports stood at $168.7 billion in the fiscal year to March, up paltry 3.4% form 2007/08, while imports grew 14.3% to $287.8 billion in 2008/09 as per official data.

Exports account for nearly 16% of India''s gross domestic product, which is a notch below a downwardly revised 2008/09 fiscal year target of $170 billion.

The trade deficit expanded 34% to $119 billion in 2008/09 from $88.5 billion in the previous year.

Indias Exports Take A Rain Check 33.3 Per Cent - May 04, 2009

India''s exports dropped 33.3 per cent in March as against corresponding period of previous year. With this, reduction reported for the sixth month in a row under the impact of a slowdown in major global markets.

Exports fell to $11.51 billion in March last fiscal, from $17.25 billion in the same month of the previous financial year, while imports dropped 34 per cent to $15.56 billion, leaving a monthly trade deficit of $4.05 billion, according to official figures. Exports contracted 12.1 per cent to $12.8 billion in October 2008, showing a negative trend for the first time in five years.

For April-March 2008-09, the country''s cumulative exports increased by 3.4 per cent to $168.70 billion. Growth for the first half of the fiscal was 30.9 per cent. Imports in April-March 2008-09 went up by 14.3 per cent to $287.75 billion. The trade deficit for the period has mounted to $119.05 billion.

India Has Got Black Money Details From Germany: Government - May 04, 2009

On 2nd May, the government said that it has already secured significant information from Germany and income-tax sleuths were following it up. The government was assuring the Supreme Court that it was trying to retrieve black money stashed in tax havens abroad.

The finance ministry revealed this in a 27-page affidavit to the apex court in response to a lawsuit accusing the government of doing precious little to retrieve Indian black money to the tune of Rs.70 trillion stashed abroad.

In its affidavit, the government also told the court that its persistent efforts in collaboration with international community have also resulted in Switzerland agreeing to make its secretive banking laws and norms more transparent in tune with the global standards.

Director Priya V.K. Singh of the Department of Revenue under the finance ministry told the court that following repeated efforts since Feb 27 last year, the government got the information on Indians with secret accounts in LGT Bank of Liechtenstein March 18 this year.

FDI In Retail Can Improve Production, Says Proficient - May 04, 2009

Foreign direct investment in organized retail can boost business and bring in a outbreak of economic activity to India by global players, an expert with a US-based think-tank said on 2nd May. "FDI (in organised retail) is allowed in most of the countries in the world ... why not here.

If the government opens it to FDI, there will be a flurry of (activity) by foreign players who will not only bring in investible funds but also global expertise and knowledge, much needed to develop this growing sector," the International Food Policy Research Institute Director (Asia) Ashok Gulati said.

FDI in multi-brand retail is not allowed in India and it is permissible only for the wholesale cash and carry firms and in the single brand retail.

The organized retail is growing annually by more than 70 per cent since 2002. However, since the multi-brand domestic retail sector is in the immaturity stage, it has shown significant expansion on a low base, Gulati said on the sidelines of a function.