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


agriculture sector. Retail and manufactur-      es, the rate of increase decelerated to 7.8%   4 The steps initiated by the government
ing establishments continue to be the key       as compared to 8.1% in the previous fis-         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                                                        month high of 8.1% for the week end-
the Central Statistical Organisation            GDP grows by 9 pc for Third year in              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                                                  4 India’s fiscal deficit continues to be
                                                revision in the GDP growth rate is mainly        among the highest in the world and
sector, showed the survey. This was the         on account of the revision made in the           underlying pressures are not entirely
fifth in the series of the economic census-     estimated production of agricultural             showing up in headline fiscal numbers,
es conducted by CSO, an agency under            crops. The agricultural and allied activi-       according to Reserve Bank of India
the Ministry of Statistics and Programme        ties grew by 4.5%, compared to earlier es-       Governor Dr. Y. Venugopal Reddy.
Implementation.                                 timates of 2.6% while the manufacturing
                                                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
                                                                                                 cent. In the latest quarterly review of
upward revision in the GDP growth rate is         to $100 mn External Borrowing                  business expectations survey released
mainly on account of the revision made               The Economic Times : 31-05-2008
in the estimated production of agricultur-                                                       here by the National Council of Applied
                                                The government eased its External Com-           Economic Research (NCAER), it was
al crops by the Department of Agriculture       mercial Borrowing (ECB) norm, enabling
and Cooperation,” according to the revised                                                       stated that the 2008-09 Union Budget
                                                firms in the service sector - hotels, hospi-     was presented at a time when finan-
                   .
estimates of GDP The agricultural and al-       tals and software companies - to borrow
lied activities grew by 4.5% , compared to                                                       cial market volatility, inflationary pres-
                                                up to $100 million for import of capital         sures and deceleration of the growth
earlier estimates of 2.6%, while the manu-      goods. The decision comes as a big so-
facturing sector growth has been lowered                                                         rate were beginning to cast a shadow
                                                lace to the borrowers in service sector,         over the prospects of economic expan-
to 8.8% from 9.4% . Going by the revised        who are not currently eligible to avail ECB
estimates, India’s GDP growth stood at 9%                                                        sion in the new fiscal year. Stating that
                                                under the automatic route. The govern-           in the latest round of the survey there
cent in 2007-08, compared to 9.6% regis-        ment reviews its ECB policy regularly in
tered in the previous fiscal.                                                                    is a widespread decline in business
                                                consultation with the Reserve Bank of In-        expectations across sectors, regions
                                                dia to keep it in tune with the evolving
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     4 India drops in Competitiveness In-
Per capita income of Indians for the first      external sector and its experience.              dex
time breached Rs 30,000 mark and has            On May 28, the government had amend-
reached to Rs 32,299 during 2007-08 indi-       ed the ECB policy to enable borrowers in
cating their growing purchasing power.          infrastructure sector to avail ECB up to
The revised estimates, which were re-           $100 million for rupee expenditure for per-       India has suffered a drop in ranking in
leased by the government indicate that per      missible end-uses under the approval              the latest 2008 IMD World Competi-
capita income at current prices rose by         route.                                            tiveness Yearbook. The country has
12.3% from Rs 29,642 to Rs 32,299 during                                                          been placed 29th in a list of 55 econo-
the year. At constant prices (1999-2000                                                           mies assessed for competitiveness by
prices), which is worked out after taking                                                         the IMD — a leading business school
into account the erosion in purchasing                                                            based in Lausanne, Switzerland — with
power of rupee, the per capita income           4 The rupee crossed the psychological             Thailand and the Czech Republic forg-
moved up to Rs 24,321 representing an             mark of 42, due to lower industrial pro-
                                                                                                  ing ahead. Within the emerging econ-
increase of 7.8% during 2007-08. Howev-           duction data, high oil price and infla-
                                                                                                  omy space, India has been rated be-
er, there has been a deceleration in the          tion. The lack of dollar supply com-
                                                                                                  low Singapore (2), Hong Kong (3), Tai-
growth of per capita income at current            bined with continuing dollar demand
                                                                                                  wan (13), China (17), Malaysia (19) and
prices, which rose by 12.3% during 2007-          from domestic oil companies, also
                                                                                                  even Estonia (23) and Chile (26). How-
08 as compared to an increase of 14.2%            made the greenback dearer in the cur-
                                                                                                  ever, it has been adjudged more com-
during the previous fiscal. Similarly, in the     rency market. The rupee ended at 42.05
                                                                                                  petitive vis-a-vis the likes of South Ko-
case of per capita income at constant pric-       against the dollar.
                                                         Indian Economic Scenario : 4 (6)                                           June, 2008


   rea (31), Brazil (43), Russia (47), Mexi-
   co (50), Indonesia (51), Argentina (52)                         MOVERS & LEADERS – A LIMELIGHT
   and South Africa (53). IMD’s rankings
   are derived from 331 competitiveness          * Mr. Atul Gupta, I.A.S,                          * Mr. Shah, K.A.S,
   criteria revolving around four basic            Chief Secretary,                                  Director,
   parameters of economic performance,             Uttar Pradesh.                                    Social Welfare,
   government efficiency, business effi-                                                             Kashmir.
   ciency and infrastructure.                    * Mr. B.K. Bansal,
                                                   Regional Director (southern region),            * Mr. Sarva Shiksha Abiyan,
                                                   Ministry of Corporate Affairs.                    Director,
                                                                                                     Rural Development,
“While India was a country driven through        * Mr. Mohammad Ashraf Bukhari, K.A.S,               Jammu.
‘management by processes’, much to its             Special Secretary,
detriment, China, on the other hand, is driv-      Forest Department,                              * Mr. Bashir Ahmad Saraf,
en by ‘management by objectives”.                  Kashmir.                                          Joint Director,
          Mr. Montek Singh Ahluwalia,                                                                Industries & Commerce (M & S),
     Chairman, Planning Commission.              * Mr. Mohammad Abbas Dar, K.A.S,                    Jammu.
                                                   Director,
                                                   Rural Development,                              * Prof. S. Mahendra Dev,
                                                   Kashmir.                                          Chairman,
                                                                                                     Commission for Agricultural
                                                 * Mr. Syed Altaf Hussain, K.A.S,                    Costs and Prices,
                                                   Special Secretary,                                Department of Agriculture and
                                                   Power Development Department,                     Co-operation,
                                                   Kashmir.                                          Ministry of Agriculture,
                                                                                                     Government of India ,
                                                                                                     New Delhi.

                                                                      (*Appointments in the month of May, 2008)




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        Sr. Faculty Member,
        Institute of Public Enterprise,
        O. U. Campus, Hyderabad - 500 007.
        Tel : 27095480, Fax : 27095478
        E-mail : trivikram.ipe@gmail.com

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