World Bank Will Soon Clear A Special Loan Package - March 16, 2009

World Bank will soon clear a special loan package of $2.6 billion. Under the package, India Infrastructure Finance Company is expected to get $1.2 bn while SIDBI $400 mn and Power Grid Corporation $1 bn.

World Bank''s Economic Adviser (India) Giovanna Prennushi told that the Bank is in advanced stages of approving this package. Besides this, the World Bank is also working on a loan of $3 bn for the recapitalization of public sector banks. The World bank in December last year had decided to step up its exposure to India to $14 bn beginning 2009 from about $8.1 bn during the previous three years. In line with this, the bank till February this year has approved five projects in India with a total commitment of $1.34 bn. World Bank had sanctioned a loan of $400 mn earlier this year to Power Grid Corporation.

The intentions of the World Bank over increasing its exposure to the Indian infrastructure sector is in line with its thinking that such investments would help developing nations to tide over the global recession.

Exports Fallen By 21% - March 16, 2009

The exports of India are estimated to have fallen 21 per cent in the month of February, which is a decline for fifth straight month. This is the biggest contraction in exports this fiscal that reflecting the demand collapse for Indian goods in the developed economies, which are bleeding under recession. While official data is yet to come out, but an official said that the exports in the penultimate month of the fiscal 2008-09 are set to shrink to about $11 bn as against $14.23 bn in the corresponding period last year.

Along with this, he said even the exports target, which was changed earlier to $175 bn from $200 bn for 2008-09 would be hard to meet. The exports during April-January 2008-09 have aggregated to $144.26 bn, showing a growth of 13.2 per cent. The value of merchandise shipments expanded by 21.62 per cent in the corresponding period last year. The exports after showing impressive gains till September 2008-09 went into negative zone from October when the contraction was 12.1 per cent.

However, the Federation of Indian Export Organizations (FIEO) President Sakthivel said, by looking at the falling trend it is very difficult even to achieve the target of $175 bn for the current fiscal. We can at best touch $168 billion. He said that the falling trend would continue till September and may be after that there would be any possibility of revival of exports. The US and the European Union contribute about 35 per cent to the country''s exports. With these economies in recession, the demand for overseas goods in these countries have shrunk. The textile as well as handicrafts, leather and leather goods are the worst hit sectors.

FX Reserves Dip At $247.292 Bln - March 14, 2009

Foreign exchange reserves dropped for the second consecutive fortnight to $247.292 billion, from 249.278 billion a week earlier, the Reserve Bank of India (RBI) said in its weekly statistical supplement on Friday.

Changes in foreign currency assets, expressed in dollar terms, include the effect of appreciation or depreciation of other currencies held in its reserves such as the euro, pound sterling and yen, the central bank said.

However, annual money supply growth touched 19.6%. The government has continued to emphasize on ways and means advances (WMA) to meet its revenue mismatches, reflecting weakening of government finances.

Inter-Bank Call Rate Ended Marginally Up - March 14, 2009

The inter-bank call rate ended marginally up at 3.60-3.70 per cent, against the previous close of 3.55-3.60 per cent. There was one bid for Rs 225 crore in the three-day repo auction under the first liquidity adjustment facility (LAF). In the reverse repo auction, the RBI received and accepted 7 bids for Rs 17,950 crore. Under the second LAF, there was one bid for Rs 75 crore in the repo auction. In the reverse repo auction, there were 28 bids for Rs 32,515 crore. In the 14-day special repo auction scheme for mutual funds and NBFCs under the LAF, there was one bid for Rs 100 crore. In the CBLO market, there were 624 trades for Rs 46,886.15 crore in the range of 0.49-4.25 per cent.

Earnings Of Workers Dropped - March 13, 2009

In labour concentrated sectors, earning of workers dropped by 3.45 per cent a month during the third quarter of this fiscal due to worsening global economic crises, according to an official report.

Ministry of Labour and Employment said in its report after a survey of eight sectors, "The average earnings have declined at the rate of 3.45 per cent per month during the period of study (October-December 2008)." The eight sectors which surveyed, include textiles, mining, gems and jewellery, and automobiles

Average monthly earning went down by 11.43 per cent in November to Rs 15,259 and by 0.5 per cent to Rs 15,182 in the following month, the report said.

RBI Offers Special Repo - March 13, 2009

The Reserve Bank of India said in a statement that it would conduct a special fixed term repo auction at 5% per annum for Rs. 583.30 bn on Friday, which was due for reversal on March 30. The outstanding amount under this facility as on March 12, 2009 stood at Rs1,670 crore.

However, the special fixed rate term repo under Liquidity Adjustment Facility is available till September 30, 2009 up to a cumulative amount of Rs.60,000 crore. This amount is on outstanding basis to banks exclusively for the purpose of meeting requirements of MFs, NBFCs and HFCs.

Bond Prices Moved Lower - March 13, 2009

Bond yields arrived at the levels last seen in December 2008, with the yields on the 8.24 per cent crossing 7 per cent. According to the source, fears of excess supply and lack of trading interest pulled the bond market down. On March 12, bond prices whole day moved lower and closed about Rs 2 down than the previous close. Trading was extended by 30 minutes as the market waited for the Reserve Bank of India to announce the cut-offs for the buyback.

The cut-off yields announced by the RBI were higher than market expectations. The total traded volumes on the order matching system stood at Rs 6,320 crore (Rs 3,480 crore). The most highly traded 8.24 per cent- 2018 paper opened at Rs 109 (6.89 per cent YTM) and ended at Rs 107.05 (7.17 per cent YTM), against Monday''s close of closed at Rs 109.4 (6.83 per cent YTM). The 6.05 per cent-2019-10 year paper opened at Rs 95.5 (6.68 per cent YTM) and closed at Rs 94.25 (7.0 per cent YTM).

India Inc Upbeat On Jobs: Grant Thornton- March 12, 2009

44 per cent of businesses in India are expecting rise in job opportunities in the next one year despite the global economic downturn, according to a Grant Thornton research report.

However, employees at nearly one-fifth of privately held businesses, globally, could see no salary increases in the year ahead. About 44 per cent businesses in India expect an increase in employment opportunities in the ensuing 12-months, while 16 per cent believe that employment opportunities would decrease and the rest (40 per cent) expect it to remain unchanged, the Grant Thornton International Business Report said.

Twenty-one per cent of businesses plan to offer no increase in pay in 2009, while 3 per cent actually expect to reduce pay. Only 10 per cent of businesses expect to increase pay above the rate of inflation, the report said. Perhaps more worrying for employees is that a significant number of privately-held businesses (60 per cent) in India intend to increase salaries of their staff only in line with inflation, Grant Thornton India National Markets Leader Monish Chatrath said.

Service Tax Notice Puts Sub-Brokers In Fix- March 12, 2009

Tax authorities have served notices to hundreds of sub-brokers and asked them for payment of service tax for the last four years. This move is creating difficulties for them. The arrears and penalty only total to huge amount and at present, this could make many of them out of business, said a stockbroker. More than 200 sub-brokers of Geojit Financial Service Ltd, a Kerala-based broking firm, received notices asking them to pay service tax from October 2004.

The tax authorities, it is learnt, have acted on the basis of an observation made by the Comptroller and Auditor-General (CAG) that services rendered by a sub-broker to the main broker are taxable under “Business Auxiliary Services” (under Section 65(19) of the Service Tax Rules).

However, according to the brokers, sub-brokers are not registered with the Service Tax Department as they do not directly issue bills and collect payments from clients. They are registered with the main broker and the service taxes on brokerages are collected and paid by the main broker.