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					Vol : 4, No : 6                Editor :   R.K.Mishra                Managing Editor :   K.Trivikram                          June, 2008
     Parliament passes Finance Bill             nals a global shift in the distribution of      would be applicable on the seven new tax-
        Business Line : 01-05-2008              wealth which will result in the terms “G7”      able services announced in Budget 2008-
Parliament passed the Finance Bill 2008,        or “developed” as an outmoded categori-         09.
with the Rajya Sabha returning the Bill.        sation for wealthy economies. The House-
                                                hold Wealth Index, developed by both              RBI appoint s Banking Ombudsman
With this, the budgetary process for 2008-
                                                Barclays Wealth and the Economic Intel-                   The Pioneer : 14-05-2008
09 has been completed. The Finance Bill
                                                ligence Unit (EIU), forecasts that India        The Reserve Bank of India (RBI) has ap-
2008 was passed by the Lok Sabha.
                                                from its current position of 14 would be-       pointed ‘Banking Ombudsman’, under
  S&P’s Long-Term outlo ok on India             come the eight largest wealth market by         the ‘Banking Ombudsman Scheme 2006’
                                                the year 2017. The index also predicts that     for the effective and free solution of the
           remains Stable                       the number of dollar-millionaires would         complaints related to banks. According to
         Business Line : 01-05-2008             increase from the current negligible num-       RBI, banking ombudsman would hear the
Standard & Poor’s Ratings Services af-          ber to more than four lakh in the coming        complaint and would also solve it effec-
firmed its ‘BBB- long-term and ‘A-3’ short-     ten years. India will experience one of the     tively. The complaints about the lack of
term sovereign credit ratings on India. The     largest absolute increases in the number        facilities provided by the banks including
outlook on the long-term rating remains         of dollar-millionaires over the next decade,    commercial banks, regional rural banks,
stable. This reflects the country’s strong      ahead of nations such as Canada, Spain,         etc, would be resolved free of cost. Also,
economic prospects, external balance            Hong King and Italy, forecasts the re-          the aforementioned scheme would come
sheet and its deep capital market, which        search report. It also stated that the wealth   into effect, if the relating bank would not
supports a weak, but improving, fiscal          held by high networth Indian households         take the complaint seriously, in a month’s
position, said a press release from S&P     .   would total to about $1.7 trillion in 2017.     time. Besides, according to RBI com-
The factors aiding India’s strong econom-       The factors that will drive India’s wealth      plaints includes the late payment of cash
ic prospects include the dynamic service        going forward is inherited wealth, promot-      to the customers, unwanted delay in the
sector, gradual deregulation of the indus-      er’s wealth, contribution from profession-      deposition and withdrawal of cheques and
trial sector, continued trade liberalisation    als and celebrities, feels Mr Satya Bansal,     drafts, denial of bank for accepting notes
and modest improvements in infrastruc-          CEO, Barclays Wealth, India. The wealthy        and coins of lower denomination without
ture. Higher consumption and private in-        in India, according to the report, hold more    genuine reason, not following the timings
vestment demand, due to a growing mid-          than half of their savings in physical as-      of duty hours and so on. According to the
dle class and favourable demographics,          sets such as real estate and gold. The re-      banking ombudsman, customer should
are also helping economic growth, said          search states that property accounts for        ask for the receipt of the complaint sub-
S&P About the stable outlook, S&P said          around 43 per cent of overall household         mitted in the relating bank. If the bank has
it balances India’s strong external liquid-     wealth and up to $200 billion worth of gold.    cancelled the complaint or if the bank has
ity and growth prospects with its weak fis-     Barclays Wealth is expected to start its        given any feedback of the complaint, in
cal flexibility. Further rating improvements    operations in India by the second half of       such conditions, customer should ap-
will depend on sustained prudent fiscal         this year.                                      proach the banking ombudsman for the
policy that leads to further declines in the                                                    quick and effective actions against the
government debt and interest burdens,             Seven new Services under Tax net              bank.
and additional reforms that lift the coun-
try’s growth prospects and income levels.
                                                           from May 16                            India bigger source of FDI for EU
                                                        Business Line : 11-05-2008
India to become 8th Wealthiest Place            Service tax will be applicable on informa-                    than China
                                                tion technology software services, invest-               The Pioneer : 20-05-2008
      by 2017: Barclays Wealt h                 ment management services under unit-            Among the BRIC (Brazil, Russia, India,
        Business Line : 08-05-2008              linked insurance plan, internet telecom-        China) countries, India emerged as the
Barclays Wealth published its report ti-        munication services and services provid-        largest source of Foreign Direct Invest-
tled ‘Evolving Fortunes’, which signals         ed by stock exchanges, commodity ex-            ment for the European Union in 2007, to
the rise of emerging markets such as In-        changes and clearing houses. With the           high value takeover deals like Tata-Corus.
dia, displacing more developed econo-           Finance Bill 2008 receiving Presidential        From a mere 500 million euruos in 2006,
mies, with China, Brazil and Russia also        assent, the Finance Ministry notified May       India’s FDI to EU leapfrogged to 9.5 bil-
reaching the top 12 wealthiest countries        16 as the date from which service tax           lion euros in 2007, way ahead of inflows
ranking. This, according to the report, sig-
                                                        Indian Economic Scenario : 4 (6)                                        June, 2008

from China (500 million euros), Russia (1.0        Forex Reserves rise by over $1 b              ed for USD 48.389 billion previous year,
billion euros) and Brazil (1.9 billion euros),           Business Line : 24-05-2008              according to the latest data released by
according to Eurostat data. In fact, FDI         The country’s foreign exchange reserves         the Petroleum Ministry. In rupee term, the
from China and Russia to the 27-nation EU        increased by $1.381 billion to touch            import bill has risen 24.5% to Rs 2,72,699
declined from 2.2 billion euros and 1.5 bil-     $314.081 billion for the week ended May         crore as against Rs 2,19,029 crore previ-
lion euros. Besides India emerging as an         16, 2008, according to the RBI’s Weekly         ously.
important source of FDI for EU firms, it         Statistical Supplement. This is the second
also saw big rise as a destination for Eu-                                                           Microfinance to grow ab ove Rs
                                                 week in a row that forex reserves have in-
ropean investment, much more than Chi-           creased. In the previous week, the re-                25,000 cr by 2012 : Study
na and Brazil. While the EU outflows to          serves had increased by $200 million to                   The Pioneer : 29-05-2008
India were 10.9 billion euros, they were         $312.7 billion.During the week under re-        The microfinance sector in India is ex-
only 1.8 billion euros to China and 7.1 bil-     view, foreign currency assets increased by      pected to grow nearly 10 times to reach
lion euros to Brazil.                            $1.342 billion to $304.118 billion, primarily   Rs 25,000 crore in the next four years, a
                                                 due to a currency revaluation effect. The       study says. At present, the sector is esti-
       World Bank pat for Orissa                                                                 mated to be worth Rs 2,700 crore. The
                                                 dollar was steady to weak, against the
         The Telegraph : 21-05-2008                                                              study conducted by Sa-Dhan, an associa-
                                                 euro, during that week. Foreign currency
The World Bank, which has been support-                                                          tion of community development finance
                                                 assets expressed in dollar terms include
ing fiscal reforms in Orissa since 2001,                                                         institutions, shows that the sector is pro-
                                                 the effect of appreciation or depreciation
confirmed that the most fiscally-stressed                                                        jected to have a compounded annual
                                                 of non-US currencies (such as euro, ster-
state in India in the mid-nineties has made                                                      growth rate of 76% . Also, the microfinance
                                                 ling, yen) held in reserves.
the strongest turnaround. Mr. V.J. Ravis-                                                        client base is estimated at 40 crore from
hankar, a leading economist of the World             India, China leading Investment             the current 1.5 crore poor people by 2018.
Bank and the expert who conducted a
study “Orissa in Transition: from Fiscal                       Destinations                      By 2012, an annual demand of at least Rs
                                                      The Financial Express : 26-05-2008         25,000 crore (USD 6.25 billion at a conver-
Turnaround to rapid and Inclusive                                                                sion rate of Rs 40 to a dollar) can be ex-
Growth”. for the World bank on Orissa’s          According to global consultancy Grant
                                                 Thornton’s International Business Report        pected, the study stated. The study is
turnaround, said that Orissa’s economic                                                          based on data submitted by about 83 mi-
growth has been faster than the Indian           2008 on emerging global markets, China,
                                                 India and Russia have emerged as the            crofinance institutions as on December
average in majority of sectors during 2003-                                                      2007.
06. While the industry (mining, manufac-         top three most- favoured destinations for
turing, electricity and construction) led the    investment and development. These are           RBI Reference Rate for US dollar and
recent growth acceleration in Orissa by          followed by Mexico at fourth and Brazil at
achieving an annual growth of around             fifth place. The study also revealed the                       Euro
20%, the service sector grew at a rate of        presence of 22 other rapidly growing glo-               Daily Excelsior : 29-05-2008
nearly 10% . Even agriculture, which was         bal economies, including Malaysia, Indo-        The Reserve Bank of India fixed the Ref-
beset by the recent drought, has now re-         nesia, Iran, Pakistan, Thailand and Poland,     erence Rate for the US currency at Rs
covered and is growing at an average rate        that offer immense avenues for future           42.85 per dollar and the single European
of 2%, the expert confirmed. Releasing the       growth. “Availability of low-cost yet high-     unit at Rs 67.36 per Euro from Rs 42.89 per
findings, Mr. Ravishankar said the pover-        ly educated labour force with strong work       dollar and Rs 67.61 respectively. In a press
ty headcount has declined significantly          ethics, combined with fast industrialisa-       note issued by the apex bank, the ex-
during 2000-05 by more than 8% in rural          tion, technology deployment and a strong        change rates of Great Britain’s Pound and
areas and 2.5% points in urban Orissa. The       focus on infrastructure development is          Japanese Yen against the Rupee have
national average is of 5 and 2%, respec-         enabling these countries to close the gap       been given as Rs 84.7402 per pound and
tively. The expert believes that the turn-       with the more affluent and relatively slow-     Rs 41.22 per 100 yen respectively, based
around could be an important lesson for          er-growing mature economies,” according         on the Reference Rate for US dollar and
the rest of India.                               to Grant Thornton India national markets        middle rates of the cross currency quotes
                                                 leader Mr. Monish Chatrath. According to        at noon. The Reference Rate is based on
Debt waiver for Farmers hiked to Rs              recent projections, China’s economy             12 noon rates of a few select banks in
                                                 would move ahead of the US by 2027, In-         Mumbai and the SDR-Rupee rate will be
             71,680 cr                                                                           based on this rate, the release added.
                                                 dia would catch up with the US by 2050
    The Financial Express : 23-05-2008
                                                 and the BRICs (Brazil, Russia, India and
The government hiked the provisions for
                                                 China) as a group will surpass the G7 by            Manufacturing Sector is India’s
debt waiver for farmers by a hefty 20% to
Rs 71,680 crore, a move that would enlarge
                                                 2032.                                                 largest Employer: Census
                                                                                                      The Economic Times : 29-05-2008
the scope for relief for peasants. The deci-     India’s Crude Import Bill surges 40 pc          An estimated 100.9 million people were
sion to increase the debt waiver amount                  Daily Excelsior 28-05-2008
from Rs 60,000 crore, announced in the                                                           employed in 41.8 million establishments
                                                 India’s crude oil import bill has jumped        in India, growing at 2.78% and 4.69% , re-
Union Budget for 2008-09, was taken at a         over 40% to USD 68 billion in 2007-08 on
meeting of the cabinet presided over by                                                          spectively between 1998-2005, according
                                                 relentless rise in international prices. The    to the Economic Census for 2005. Non-
Prime Minister Dr. Manmohan Singh.               nation imported 121.672 million tons of         farm sector continued to be the principal
                                                 crude oil for USD 67.988 billion in 2007-08     source of employment, employing 90 mil-
                                                 as opposed to 111.502 million tons import-
                                                   Indian Economic Scenario : 4 (6)                                           June, 2008

lion people, compared to 10.9 million in        case of per capita income at constant pric-       against the dollar.
agriculture sector. Retail and manufactur-      es, the rate of increase decelerated to 7.8%
ing establishments continue to be the key       as compared to 8.1% in the previous fis-       4 The steps initiated by the government
                                                                                                 seem to have little impact on rising
employment providers in India,” accord-         cal.
                                                                                                 prices as the inflation rose to a 45-
ing to Mr. S.K. Nath, Director General of
the Central Statistical Organisation            GDP grows by 9 pc for Third year in              month high of 8.1% for the week end-
                                                                                                 ed May 17 on account of rising prices
(CSO), which compiled the census. “It is                      row                                of fruits, vegetables, pulses, spices and
a significant pointer that India has a great              The Pioneer : 31-05-2008               some industrial fuels. The wholesale
deal of potential for growth in these two       The robust agricultural growth has come          price index-based inflation was 7.82%
sectors,” he said. Manufacturing sector         as a contributing factor to GDP growth           a week ago and 5.3 per cent during the
employed 25.5 million people or 25.25% of       that has touched 9% from 8.7% estimated          corresponding week last year.
the total workforce, followed by 25.1 mil-      earlier. The government said, the upward
lion or 24.91%, respectively for retail trade   revision in the GDP growth rate is mainly      4 India’s fiscal deficit continues to be
sector, showed the survey. This was the         on account of the revision made in the           among the highest in the world and
fifth in the series of the economic census-     estimated production of agricultural             underlying pressures are not entirely
es conducted by CSO, an agency under            crops. The agricultural and allied activi-       showing up in headline fiscal numbers,
the Ministry of Statistics and Programme        ties grew by 4.5%, compared to earlier es-       according to Reserve Bank of India
Implementation.                                 timates of 2.6% while the manufacturing          Governor Dr. Y. Venugopal Reddy.
                                                sector growth has been lowered to 8.8%         4 Business Confidence Index (BCI),
  Ro bust Agri Growth pushes GDP to             from 9.4% . The economy grew at 8.8% in          the barometer for measuring the
            9% in 2007-08                       the March quarter, beating forecasts and         moods of the country’s corporate sec-
     The Economic Times : 30-05-2008            holding a steady pace in the second half         tor, saw a dent in optimism due to fi-
Buoyancy in agriculture has pushed the          of the fiscal year despite earlier monetary      nancial market volatility, with the BCI
economic growth to 9% , up from 8.7%            policy tightening.                               slipping from 154 in the previous sur-
estimated earlier, even as the performance                                                       vey of January 2008 to 148.7 in the post-
of manufacturing sector deteriorated. The       Government allows Service Sector up              budget round or a decline of 3.4 per
upward revision in the GDP growth rate is         to $100 mn External Borrowing                  cent. In the latest quarterly review of
mainly on account of the revision made               The Economic Times : 31-05-2008             business expectations survey released
in the estimated production of agricultur-      The government eased its External Com-           here by the National Council of Applied
al crops by the Department of Agriculture       mercial Borrowing (ECB) norm, enabling           Economic Research (NCAER), it was
and Cooperation,” according to the revised      firms in the service sector - hotels, hospi-     stated that the 2008-09 Union Budget
estimates of GDP The agricultural and al-       tals and software companies - to borrow          was presented at a time when finan-
lied activities grew by 4.5% , compared to      up to $100 million for import of capital         cial market volatility, inflationary pres-
earlier estimates of 2.6%, while the manu-      goods. The decision comes as a big so-           sures and deceleration of the growth
facturing sector growth has been lowered        lace to the borrowers in service sector,         rate were beginning to cast a shadow
to 8.8% from 9.4% . Going by the revised        who are not currently eligible to avail ECB      over the prospects of economic expan-
estimates, India’s GDP growth stood at 9%       under the automatic route. The govern-           sion in the new fiscal year. Stating that
cent in 2007-08, compared to 9.6% regis-        ment reviews its ECB policy regularly in         in the latest round of the survey there
tered in the previous fiscal.                   consultation with the Reserve Bank of In-        is a widespread decline in business
                                                dia to keep it in tune with the evolving         expectations across sectors, regions
Per Capita Income reaches Rs 32,299             macro-economic situation, changing mar-          and size and categories
         The Pioneer : 31-05-2008               ket conditions, sectoral requirements, the
Per capita income of Indians for the first      external sector and its experience.            4 India drops in Competitiveness In-
time breached Rs 30,000 mark and has                                                             dex
                                                On May 28, the government had amend-
reached to Rs 32,299 during 2007-08 indi-       ed the ECB policy to enable borrowers in          India has suffered a drop in ranking in
cating their growing purchasing power.          infrastructure sector to avail ECB up to          the latest 2008 IMD World Competi-
The revised estimates, which were re-           $100 million for rupee expenditure for per-       tiveness Yearbook. The country has
leased by the government indicate that per      missible end-uses under the approval              been placed 29th in a list of 55 econo-
capita income at current prices rose by         route.                                            mies assessed for competitiveness by
12.3% from Rs 29,642 to Rs 32,299 during                                                          the IMD — a leading business school
the year. At constant prices (1999-2000                                                           based in Lausanne, Switzerland — with
prices), which is worked out after taking                                                         Thailand and the Czech Republic forg-
into account the erosion in purchasing                                                            ing ahead. Within the emerging econ-
power of rupee, the per capita income           4 The rupee crossed the psychological             omy space, India has been rated be-
moved up to Rs 24,321 representing an             mark of 42, due to lower industrial pro-
                                                                                                  low Singapore (2), Hong Kong (3), Tai-
increase of 7.8% during 2007-08. Howev-           duction data, high oil price and infla-
                                                                                                  wan (13), China (17), Malaysia (19) and
er, there has been a deceleration in the          tion. The lack of dollar supply com-
                                                                                                  even Estonia (23) and Chile (26). How-
growth of per capita income at current            bined with continuing dollar demand
                                                                                                  ever, it has been adjudged more com-
prices, which rose by 12.3% during 2007-          from domestic oil companies, also
                                                                                                  petitive vis-a-vis the likes of South Ko-
08 as compared to an increase of 14.2%            made the greenback dearer in the cur-
                                                                                                  rea (31), Brazil (43), Russia (47), Mexi-
during the previous fiscal. Similarly, in the     rency market. The rupee ended at 42.05
                                                        Indian Economic Scenario : 4 (6)                                           June, 2008

   co (50), Indonesia (51), Argentina (52)
   and South Africa (53). IMD’s rankings                          MOVERS & LEADERS – A LIMELIGHT
   are derived from 331 competitiveness
   criteria revolving around four basic         * Mr. Atul Gupta, I.A.S,                          * Mr. Mohammad Abbas Dar, K.A.S,
   parameters of economic performance,            Chief Secretary,                                  Director,
   government efficiency, business effi-          Uttar Pradesh.                                    Rural Development,
   ciency and infrastructure.                                                                       Kashmir.
                                                * Prof. S. Mahendra Dev,
4 Buoyancy in agriculture has pushed                                                              * Mr. Syed Altaf Hussain, K.A.S,
  the economic growth to 9% , up from             Chairman,
                                                  Commission for Agricultural                       Special Secretary,
  8.7% estimated earlier, even as the per-
                                                  Costs and Prices,                                 Power Development Department,
  formance of manufacturing sector de-
                                                  Department of Agriculture and                     Kashmir.
  teriorated. The upward revision in the
  GDP growth rate is mainly on account            Co-operation,
  of the revision made in the estimated           Ministry of Agriculture,                        * Mr. Shah, K.A.S,
  production of agricultural crops by the         Government of India ,                             Director,
  Department of Agriculture and Coop-             New Delhi.                                        Social Welfare,
  eration,” according to the revised esti-                                                          Kashmir.
  mates of GDP The agricultural and al-
                  .                             * Mr. B.K. Bansal,
  lied activities grew by 4.5%, compared          Regional Director (southern region),            * Mr. Sarva Shiksha Abiyan,
  to earlier estimates of 2.6%, while the         Ministry of Corporate Affairs.                    Director,
  manufacturing sector growth has been                                                              Rural Development,
  lowered to 8.8% from 9.4% . Going by          * Mr. Mohammad Ashraf Bukhari, K.A.S,               Jammu.
  the revised estimates, India’s GDP              Special Secretary,
  growth stood at 9% cent in 2007-08,             Forest Department,                              * Mr. Bashir Ahmad Saraf,
  compared to 9.6 per cent registered in          Kashmir.                                          Joint Director,
  the previous fiscal.                                                                              Industries & Commerce (M & S),
4 An estimated 100.9 million people were
  employed in 41.8 million establish-
  ments in India, growing at 2.78% and                               (*Appointments in the month of May, 2008)
  4.69% , respectively between 1998-2005,          great deal of potential for growth in
  according to the Economic Census                                                                4 The Reserve Bank of India fixed the
                                                   these two sectors,” he said. Manufac-            Reference rate for the US currency at
  for 2005. Non-farm sector continued to           turing sector employed 25.5 million              Rs 42.85 per dollar and the single Eu-
  be the principal source of employment,           people or 25.25% of the total workforce,         ropean unit at Rs 67.36 per Euro from
  employing 90 million people, com-                followed by 25.1 million or 24.91% , re-         Rs 42.89 per dollar and Rs 67.61 respec-
  pared to 10.9 million in agriculture sec-        spectively for retail trade sector,              tively yesterday. In a press note issued
  tor. Retail and manufacturing estab-             showed the survey. This was the fifth            by the apex bank, the exchange rates
  lishments continue to be the key em-             in the series of the economic census-            of Great Britain’s Pound and Japanese
  ployment providers in India,” accord-            es conducted by CSO, an agency un-               Yen against the Rupee have been giv-
  ing to Mr. S.K. Nath, Director General           der the Ministry of Statistics and Pro-          en as Rs 84.7402 per pound and Rs
  of the Central Statistical Organisation          gramme Implementation. The first cen-            41.22 per 100 yen respectively, based
  (CSO), which compiled the census. “It            sus of its kind was launched in 1977.            on the Reference rate for US dollar and
  is a significant pointer that India has a

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