The Fiscal Sops Would Result In Revenue Loss - Feb 26, 2009

The Lok Sabha has approved the Interim Budget, including the Finance Bill 2009 by voice vote despite a walkout by the Opposition National Democratic Alliance and the Left parties.

Pranab Mukherjee, the acting Finance Minister said "The government is keen on restoring business confidence in the services sector. It is also our objective that the dispersal between CENVAT rate and the service tax rate is reduced with a view to moving towards the Uniform Goods and Service Tax."

The announced fiscal sops will be effective from midnight and will have revenue loss of Rs. 29,000 crore to the government. The fiscal sops would result in revenue loss of Rs. 14,000 crore in service tax, Rs 8,500 crore in excise duty and Rs 6,600 crore in customs duty. Mr. Mukherjee said that the full impact of the recession in other parts of the world, especially Europe and Asia, was yet to unfold. Due to the strong export linkages with these economies, it was likely that the Indian economy might feel further impact in the coming months. To counter any such effect, the United Progressive Alliance had taken these decision, he said adding that the Union Budget was just one of the instruments for addressing economic policy concerns and the government would take necessary measures as and when required, until the next regime took over.

He also said that the irregularities faced by suppliers to Special Economic Zones with regard to treatment of export profits will be addressed in the regular budget. As regards the States, Mr. Mukherjee said that as part of the stimulus package they had been allowed to borrow an additional 0.5% of the Gross State Domestic Product (GSDP). The exemption, he added, would continue in 2009-2010 with the possibility of further review.

Fiscal Deficit Of India Would Grew - Feb 19, 2009

The fiscal deficit of India would grew to about 7.8 per cent if off-budget items like bonds issued to oil companies are included, said Planning Commission Deputy Chairman Montek Singh Ahluwalia.

The Budget shows that the number is going to be 6 per cent as a fiscal deficit and this does not include about 1.7 per cent, which is the bonds etc, which are not counted, Ahluwalia said in an interview to private television channel. He also said that the year 2008-09, we started off with fiscal deficit which we thought should be 2.5 percent and then another half a percent for pay commission to be 3 per cent, he said. However, the government has been reacting to that crisis through multiple channels and a lot of action has been taken.

Indian Economy Is Likely To Record A Growth Rate - Jan 20, 2009

The Indian economy is likely to record a growth rate of 7.4 per cent in the last quarter of the 2009 fiscal as well as in the entire fiscal, a report by CMIE, said.

"We expect the fourth-quarter to register a real GDP growth of 7.4 per cent. Fiscal 2008-09 will thus end with a growth of 7.4 per cent", the Centre for Monitoring Indian Economy (CMIE) said. It however, expects the GDP for the third quarter of FY''09 to stay at around 6.7 per cent, substantially lower than the 7.8 per cent reported during previous two quarters.

The Reserve Bank and Centre together over the past two months have partially repaired the damages caused by the break-down of the international financial markets, the report said. It also added that the "liquidity was pumped in and interest rates were reduced by the RBI". The report also said, global financial markets collapse in October dried up the international finance trade, leading to a fall in exports as well as the Index of Industrial Production (IIP) and cargo movement, the report said. The economy deterioration in the third quarter is almost entire and caused due to the global liquidity crisis, CMIE said.

Economic Woes To Persist In Next Fiscal - Jan 19, 2009

Prime Minister Manmohan Singh said the country through the next fiscal will have to live with economic woes because the policy measures of the government cannot fully insulate the domestic economy from the impact of the global downturn. "Growth in the current year will be lower than the last year and our problems will not be over in the current year. The difficult period will continue into 2009-10", Singh said at a function in Mumbai.

However, the Prime Minister said that the easing of inflation has given monetary flexibility to deal with the difficult economic environment. Fortunately the rate of inflation has eased considerably and is now 5.2 per cent and is expected to decline further. This gives ample flexibility for monetary policy. He said that next year as well the government would have to continue with the supporting the environment.

However, the Prime Minister said that in the wake of the growing fiscal deficit, the government has limited space for providing more tax cuts even though it (the government) has to "tolerate" it for the next year to accommodate the expenditure needed for stimulating the economy. The Prime Minister said estimates of GDP growth for the current fiscal vary between 6.5 and 7 per cent.

He also added "Our government has also taken a number of steps to counter the global downturn. We are encouraging the banks, especially the public sector banks, to lend more freely to help otherwise viable production units to cope with the temporary stress of the economic downturn,". The government and the Reserve Bank have announced measures including interest rate cuts and across-the-board reduction in excise duty to boost demand. Besides this, the exporters as well as the small-scale industries have been given packages - fiscal and monetary.

Indian Economy To Grow At 7.5% This Fiscal: Experts

Experts feel that economic growth rate is likely to moderate to 7-7.5 per cent during the current fiscal, against 8.7 per cent during 2007-08, though it may be slightly better in case the core sector improves further. The growth rate of 7 to 7.5 is an intrinsic growth rate for the country and we are settling down at this sustainable figure for this fiscal," said Citi CEO Sanjay Nayyar at a panel discussion in New Delhi. Standard and Poor''s Chief Economist (Asia Pacific) Subir Gokaran and economist Omkar Goswami agreed with the growth numbers projected by Nayyar for the current fiscal.Gokaran said the most pressing worry at present is the spiralling food prices and reducing food stock across the world. To drive his point, he cited an FAO outlook which said global stock of cereals for 2008 is going to be the lowest in the last 25 years.

Exports From Sezs Likely To Increase To Rs 1.4 Lakh Cr Next Fiscal

Ahmedabad: Exports from special economic zones (SEZs), mainly from the IT and ITeS-based zones, are expected to double to Rs 1,40,000 crore in the fiscal 2008-09.

In 2006-07, exports from SEZs touched Rs 34,787 crore and are expected to increase by nearly 93 per cent in 2007-08 to Rs 67,088 crore, according to Mr Ravi S. Saxena, Development Commissioner, Kandla SEZ, Union Ministry of Commerce and Industry. Nearly 70 per cent of this revenue came from the IT sector. The total land requirement for the formal approvals granted till date is nearly 59,933 hectares. Out of the 428 formal approvals, 160 are for sector-specific and multi-products purposes for labour-intensive manufacture of textiles and apparels, leather footwear, automobile components, engineering etc. In Gujarat, altogether 19 formal approvals have been given for SEZs and 16 others notified in which the proposed investment would be nearly Rs 1,06,924 crore with an expected job potential of 5,46,294 (direct and indirect). Of this, Rs 34,600 crore has already been invested, creating nearly 16,000 jobs.