7% Growth Target To Be Missed: Subbarao- March 12, 2009

It is expected that India will miss its 7 per cent growth estimate for the current fiscal year as a result of the global economic crisis, according to RBI governor Duvvuri Subbarao.

Subbarao said in an interview of Japan''s Nikkei newspaper that the next fiscal period of "2009-10 will be a more challenging year.” He also added, emerging economies should have a stronger voice in multilateral organizations such as the International Monetary Fund and the World Bank to "reflect the new realities of the global economy."

Indian economy expanded by 5.3 per cent, slowest speed in around 6 years, during December quarter as compared to corresponding period a year ago. However it had been growing with 9 per cent or higher pace in the past three fiscals.

Negative Growth In World Trade Led Drop In Indian Export - March 10, 2009

India reported its first year-over-year decline in exports due to negative growth in world trade in the last quarter of 2008. This fall in world trade raised fears of a protectionist reaction, according to a new World Bank report.

Worsening growth in global trade is in progress for some time, said the bank in a paper for next Saturday''s meeting of the Group of 20 finance ministers and central bank’s governors. Making a note that of the 51 economies reporting fourth quarter data for 2008, 36 show double-digit declines in nominal exports relative to a year ago, the paper said many European countries, including the United Kingdom and Spain, as well as developing countries registered a drop in exports of 20 percent or more.

In October, India registered its first every year-over-year decline in exports (of 15 percent), following growth of 35 percent in the previous five months.

Gold Extended Its Losses - March 10, 2009

Gold extended its losses and lost another Rs 40 to close at Rs 15,375 per ten gram in the bullion market in New Delhi on selling influenced by weakening global trend. Silver also followed the same trend and lost Rs 300 to settle the day at Rs 21,800 per kg as as metel prices continued to slide in overseas market.

Market men said stockists relieved of part of their holdings in line with weakening trend in overseas markets mainly put pressure on the precious metal prices. They said reduced off take by retailers due to off-marriage season further fuelled the down-trend. Standard gold and ornaments lost Rs 40 each to Rs 15,375 and Rs 15,225 per ten gram respectively. However, sovereign remained steady at Rs 12,400 per piece of eight gram. In a similar way, silver ready dropped by Rs 300 to Rs 21,800 per kg on poor off take by industrial units and weekly-based delivery by Rs 140 to Rs 22,460 per kg. Besides, silver coins continued to be asked around previous level of Rs 28,400 for buying and Rs 28,500 for selling of 100 pieces.

No Tax For Expatriate For Work Discrete - March 9, 2009

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) informed that if the expatriate employee will be able to authenticate that while working outside India, he has not involved in any activity relating to Indian operations, the salary for that time period would not be taxable here.

As per Income Tax Act, if an individual has been in India during that year (the year for which tax liability is being calculated) for 182 days or more, is a resident in a previous year. He is also treated as a resident if he is in India for 60 days or more in a year provided that he has also been in India for 365 days or more in the prior four years.

Vikas Vasal, executive director (tax and regulatory services), KPMG, said, based on this ruling a position could be taken that individual is not taxable for the period for which he has rendered service outside India. But, the documentary proof would be critical for taking this position.

Indian Corporates Had Dropped Down Their Revenue Forecast - March 9, 2009

Most of the Indian corporates had dropped down their revenue forecasts for this year. Along with this they were also looking aggressively at cutting their operational expenses through cost-cutting measures, including lesser increase in salary, according to a study by Watson Wyatt. Watson Wyatt is a global firm that is dealing with people and financial issues.

The survey affirmed that 57 per cent of the respondents had brought down their revenue forecast for 2009, while 13 per cent were considering a downgrade.Furhter, 27 per cent were still maintaining their earlier estimates but only a three per cent had raised their estimates for the year, the Watson Wyatt study said.

Growth In Infrastructure Industries - March 7, 2009

Growth in infrastructure industries like steel, coal, crude oil, electricity and petroleum and refinery products has dropped to 1.4 per cent in January this year from 3.6 per cent in the same month last year. The fall is on account of fragile performance of other sectors. Crude oil was the worst performer with decline in production by 8.1 per cent during January. Petroleum refinery products also declined by 2.6 per cent against a growth rate of 5.4 per cent in January 2008.

Analysts feel that this trend is likely to continue in view of the dismal show by almost all the sectors except the cement industry. It has not performed as badly as the manufacturing sector...weakness will continue. The economy may start picking up from the second half of 2009-10, CRISIL Principal Economist D K Joshi said.

Cement production grew by 8.3 per cent for the month under review against 5.6 per cent in January last year. For the April-January period this year, consolidated growth slipped to 3.2 per cent from 5.7 per cent a year ago. After contracting for the first time in 15 years in October, the index of industrial production (IIP) again crashed by two per cent in December against a growth rate of a whopping 8 per cent a year ago.

Gold Prices Dropped - March 5, 2009

On 4th March, gold prices dropped for the second straight day on the bullion market due to fresh offerings led by weakness in overseas markets. Silver also continued to exhibit a downward trend on lack of demand at higher levels.

The market fell as illiquid cash market forced investors to reduce other asset exposure in order to meet margin commitments a dealer said. Gold was little changed in Europe as traders stuck to the sidelines ahead of a rate-setting announcement from the European Central bank and key US jobs data later in the week.

Investors are concerned over the lack of fresh inflows into gold backed exchange-traded funds in recent sessions. Spot gold was quoted at $915.00/916.20 an ounce as against $915.70 an ounce late in New York yesterday. Turning to the local market, standard gold (99.5 purity) dropped further by Rs 260 per ten grams to Rs 15,075 from Rs 15,335 yesterday. Pure gold (99.9 purity) also fell to Rs 15,140 from Rs 15,400 previously.

Silver ready (.999 fineness) moved down by Rs 130 per kilo to Rs 21,915 from Rs 22,045.

SEZ To Claim Service Tax Refund - March 5, 2009

The government has permitted companies situated in Special Economic Zones (SEZs) to claim service tax refund for services done outside the tax-free export zones too. SEZ developers are also permitted to do the same. The benefit would flow in the shape of "refund of service tax" and not through an exemption.

As per previous norms, if a unit was transporting raw material from a port located outside the SEZ, service tax would have to be paid. Now the unit will be able to apply for refund. The refund will be allowed only for services that are related to authorized operations like activities within SEZs.

Along with this, there is one more change regarding services provided between units located within an SEZ. Earlier, this was exempted but now firms have to claim refund instead of blanket exemption.

L B Singhal, director general of Export Promotion Council for Export Oriented Units (EoUs) and SEZs, greeted the decision and said to reveal some issues, "Service tax has to be paid first and then refund has to be claimed. It would result in unnecessary blockage of funds, paper work and transaction costs. Hence it would be appropriate if exemption could be provided."

RBI Announced The Cut In Repo - March 5, 2009

On 4th March 2009, the Reserve Bank of India announced the cut in repo and reverse repo rates by 50 basis point each with immediate effect. Along with this, the repo, the rate at which the RBI lends short-term funds to banks, currently stands at 5 per cent from 5.5 per cent and the reverse repo, the rate at which the RBI borrows from banks, at 3.5 per cent from 4 per cent.

Now the banks are likely to cut both lending and deposit rates. This is the second rate cut by the RBI this calendar year. With ease in inflation rate to 3.36 per cent for the week ended February 14, 2009 and GDP growth falling to 5.3 per cent for the third quarter, rate cut by RBI was broadly expected. RBI has also cautioned banks to monitor their assets and take timely action to prevent defaults. The average PLR for most public sector banks is now 12.5 per cent.