Newsss2

Prepared by: Section G Students
Guidance: Madhura Tilak
28th January to 2nd February‘2012
NEWS FLASH

Prepared by:Students of Section G 1

Tax-free bonds flavour of the season
With Rates Set To Fall, Returns on These Investments Can Be Over 12%
Jan 28, 2012,
• New Delhi: It‘s that time of the year again when people pull out their calculators and cheque books for tax
planning. But this year, there is an additional option before them to invest in tax-free bonds issued by state-owned
infrastructure developers that promise to offer over 12% pre-tax returns, something that no other debt instrument
offers.
While National Highways Authority of India and Power Finance Corporation have already raised over Rs 15,000
crore through these bonds, at least two issuers—Indian Railway Finance Corporation and Hudco—are in the
market to raise up to Rs 11,000 crore. From all available indications, Rural Electrification Corporation too is going
to hit the markets before the end of the financial year in March, although the government is yet to agree to transfer
IRFC‘s unused limit to the power financier.
Given the trend so far, REC bonds will also offer upwards of 8.2%, post-tax, which translates into a pre-tax
return of over 12% if you are in the 30% tax bracket and over 9.5% for those in the 20% tax bracket. In the two
issues that are currently open, there is an added incentive for retail investors since they are being offered a higher
coupon, provided they do not trade for a specified period of time.
―It‘s particularly good for those in the top tax group especially when you consider the fact that deposit rates are
at their peak and the decline will start in a few months,‖ Surya Bhatia of Asset Managers, a financial advisory firm,
said. With interest rate coming down, the value of these bonds is only going to go up. ―With the bonds going to be
listed on exchanges, they offer liquidity too,‖ added Rajat Prasad, who set up financial consulting and investment
service outfit RR Finance. Bhatia suggested that you should not be looking at cashing out immediately. Put money
in these bonds only if you have a medium-to longterm investment horizon.
If you are in the lower income slabs, it makes sense to park funds in fixed deposits. Ditto for senior citizens,
especially since the bond maturity period is at least 10 years. The tax-free bonds issued by the infrastructure
developers are different from those issued by entities such as IDFC, IIFCL or IFCI that offer additional tax
deduction of Rs 20,000. In case of the ones issued by agencies such as Hudco and IRFC, it is the interest that is
exempted from tax.
Net FII inflow tops $2 bn in January
Mumbai:After a dull year in 2011, foreign fund managers are again showing their preference for the Indian market.
So far this year, net FII buying has crossed $2 billion, making January the best months in terms of foreign fund
flows since Nov 2010. TNN
•


Ranbaxy scrip dips 7% on ‘harsh
settlement’ in US (Jan 28, 2012)
• Mumbai: Drug major Ranbaxy may have to take a further hit on its financials as its moves forward on its
settlement with the US regulators. The Ranbaxy scrip fell sharply on BSE by nearly 7% to Rs 443.75 on
Friday, reacting to one of the ―harshest‖ settlements filed in the US courts on January 25, that requires
the company to make major changes at its three domestic facilities, and on speculation that it may be
further impacted.
As per the settlement, Ranbaxy may have to relinquish the 180-day market exclusivity on three pending
blockbuster drugs resulting in a loss of around $200 million in sales, if it fails to comply with USFDA
manufacturing requirements.
In December last year, the company set aside $500 million to resolve the three-yearold dispute with the
department of justice (DoJ) and FDA.
A decree signed last month by the company, and subsequently filed by the DoJ in a Maryland court,
requires Ranbaxy to comply with detailed manufacturing and quality requirements before the FDA
resumes reviewing drug applications filed from its three plants—Paonta Sahib, Batamandi and Dewas.
These facilities have been on FDA import alert since 2008.
As per the settlement, Ranbaxy has to hire a thirdparty expert to conduct a review and audit data
applications from three facilities, implement procedures to ensure data integrity in the drug applications,
and thirdly, withdraw any applications found to contain untrue statements.
Significantly, Ranbaxy has agreed to relinquish 180-days marketing exclusivity on three
pending ANDAs (abbreviated new drug applications) and on five other drugs, if it fails to meet the
decree requirements by specified dates, a FDA statement said.
Analysts feel the fine print of the consent decree has ―rigorous provisions‖ than anticipated, and may
impact the financials if the company fails in complying with the requirements.


GERC fixes tariff for solar power
Rejects cos’ plea for . 15 per unit
(Jan 28, 2012)

• Gandhinagar: The Gujarat Electricity Regulatory Commission (GERC) has rejected the
petition of 36 solar power generators to allow getting the benefit of Rs 15 per unit (kWh) for
the power they produce after the expiry of the deadline, January 28, 2012. Even as fixing
new, lower tariffs for projects which will commission after the deadline, on Friday, GERC
said, ―If the project is not commissioned within the stipulated period, the existing tariff or
the new tariff, whichever is lower, will apply.‖
Under the new GERC tariff order, Gujarat Urja Vikas Nigam Ltd (GUVNL) will have to
pay Rs 9.98 per unit of solar power for the next 12 years to the developers who commission
their projects from January 29, 2012 to March 31, 2013. Thereafter, they will be paid Rs 7
per unit for another 13 years.
Projects commissioned between April 1, 2013 and March 31, 2014 will be entitled to get
Rs 8.63 per unit for the first 12 years, and Rs 7 for the next 13 years. And, the projects
commissioned between April 1, 2014 and March 31, 2015, will be entitled to 8.03 per unit
for the first 12 years, and subsequently Rs 7 for 13 years.
GERC, in its order, said, the petitioners had ―consciously agreed‖ to the provision of a
deadline by signing up power purchase agreement (PPA) with the state-owned GUVNL.―A
number of projects have been commissioned … indicating that the issues raised by the
petitioners are not industry-wide. If some developers could not complete the projects, it is
not adequate justification why the tariff order should be modified for extending the control
period to give relief to some project developers?‖
A Gujarat government submission to the GERC earler said that while 175.40 MW of
power plants were commissioned as on December 31, 2012, another 412 MW of power
plants would be commissioned on or before January 28, 2012.


Tax dept issues 8,011 crore notice to
Essar Jan 28, 2012,
• Gandhinagar: Complying by a Supreme Court order, Gujarat‘s commercial tax department
has issued a notice to Essar Oil to pay up Rs 8,011 crore as sales tax dues for the income
period May 2008 to November 2011.
The notice, dated January 24, was issued from Jamnagar, where Essar Oil‘s refinery is
situated.
Giving a break-up, sources in the Gujarat government said, Rs 4,077 crore of this amount
is to be paid against the refusal of the company to pay up sales tax till now. Another Rs
1,601 crore would have to be paid as central sales tax dues. Rest of the amount is to be paid
as interest.
The apex court in its order dated January 18 upheld the stance of the Gujarat
government, which argued that there cannot be any sales tax incentive to Essar Oil, as the
latter had failed to commission the project by the deadline of April 2003.
Under a capital incentives scheme, eligible for entrepreneurs who applied for it between
1995 and 2000, Essar Oil was allowed for tax deferment of up to Rs 9,100 crore for 17 years,
provided the company commissioned its project before the deadline.
Essar Oil won the case in Gujarat high court. However, the state government went to the
apex court against the High Court order, arguing that Essar Oil cannot be allowed any
concession, as it had failed to complete the project by the deadline. Essar Oil began full-
scale production only in 2006.
Essar Oil starts VG bitumen production
Essar Oil, a subsidiary of Essar Energy, on Friday said it has commenced production of
viscosity grade (VG) bitumen from its Vadinar refinery. Essar Oil said it has produced
superior performance viscosity grade bitumen by processing a judicious mix of crudes and
blending components. TNN


In Facebook IPO, bankers seek
prestige over fees (Jan 30, 2012)
• Facebook‘s initial public offering is likely to set a new standard for how low investment
banks are willing to go on advisory fees to win big business. The world's largest online social
network is expected to tap public markets for $10 billion in the coming months in an
offering that will value the company at up to $100 billion, according to sources familiar
with the planned IPO. It will be one of the biggest US market debuts ever, and a prized
trophy for the investment bankers seeking to win lead advisory roles.
That has set up a fierce competition on Wall Street, particularly between the presumed
front-runners Morgan Stanley and Goldman Sachs Group Inc, which may offer their
underwriting services for as little as 1% of gross proceeds, bankers and industry observers
said.
That would be far less than the 7% fee that smaller deals typically fetch, or the 2 or 3%
that large deals tend to command.
―The Facebook IPO will be iconic,‖ said James Montgomery, chief executive of San
Francisco-based investment bank Montgomery & Co, which advises tech companies on
mergers, acquisitions and private placements.
Facebook can easily negotiate a 1% fee for the entire group of investment banks that will
peddle its shares, Montgomery said, ―much to the chagrin of the underwriters.‖ Such a low
fee is practically unheard of for investment banking deals, apart from the offerings of
bailedout companies General Motors Co, American International Group Inc and Ally
Financial Inc, which sold shares held by the US government in the aftermath of the
financial crisis. REUTERS


Airport retail biz takes off on $1bn revenue (Jan 30,
2012)

• Mumbai: The country‘s airport retail business topped $1 billion in revenues during 2011, on
the back of robust growth in passenger traffic and more people shopping on the go,
according to a boutique retail consultancy. Airport retailing is growing at 17-18% annually,
emerging as a viable platform for retailers and operators of the new airports, according to
Bangalore-based consulting firm Asipac Projects.
Beauty, personal care, alcohol and tobacco emerged as the top three categories in the
duty-free section, while food & beverage, books, periodicals and stationery took the top spot
within the duty-paid segment. Globally, airports registered approximately $43 billion in
sales, with the likes of London Heathrow and Seoul‘s Incheon being the most lucrative
ones.
―Airport stores are twice as productive for us compared to stores outside, in terms of sales
per sq ft, though operational costs go up substantially at airports. Internationally, sales per
sq ft are four to five times more compared to street stores at some of the busiest airports.
We have a long way to go to go to reach those numbers,‖ said Dipak Agarwal, chief
executive (operations and strategy), DLF Retail, which runs retail stores like Mango and
Boggi Milano at Delhi‘s IGI Airport. The Delhi domestic-cum-international terminal (T3)
has a retail area of around 2 lakh sq ft and built to tap the potential of retail revenues.


Unified KYC for insurance soon
(Jan 30, 2012)
• Mumbai: The life insurance industry will soon have a unified ‗know your customer‘ (KYC)
procedure so that existing policyholders can buy new policies without repeating the process
of providing identity, address and age proofs.
KYC practices are a part of a global effort against ‗money laundering‘ – the process
through which earnings from illegal activities are brought into the mainstream financial
system.
Efforts are on to have a central agency which will maintain records of all policyholders so
that the next time they buy a policy, they need to only quote their folio number instead of
providing documents for KYC compliance. The entities that are being considered for the
role of a central KYC registration agency are National Securities Depository (NSDL),
Central Securities Depository (CSDL), Karvy Consultant, Cams, SHCIL and Life Insurance
Corporation (LIC).
The move to create a central repository is on even as the Insurance Regulatory and
Development Authority is, at the instance of the finance ministry, looking at having a
common KYC process across the this financial sector.
Speaking to TOI, S B Mathur, chief executive of the Life Insurance Council, said that
efforts are on to have a central KYC registration procedure in place. One of the issues in
operationalising the registry is the issue of cost sharing. LIC, which has one of the largest
customer databases worlwide with over 20 crore policies, has made huge investments in
information technology and having a new registry could lead to duplication of efforts.
Sebi has already set the ball rolling for a uniform KYC in the capital market with a
registration agency being set up by CDSL. But insurers say that the capital market KYC
process does not work for insurance as life companies need data storage for 30-35 years
and also want age proofs, in addition to address and identity proof.


High interest outgo, input costs cut India Inc’s profit (Jan 30,
2012)
• Mumbai: Historically it has been observed that companies which have done relatively better
financially announce their quarterly numbers early in results seasons. The same can be said
even today. During the third week into the current results season, the net profit growth of
frontline companies from India Inc slipped further, while net profit margin — a measure of
how much a company earned per rupee of sales — slipped deeper into the red.
And, as has been observed over the last few months, the main reasons for this slowdown
in net profit growth were high expenses, coming mainly from rising raw material costs and
higher interest outgo and, in some cases, higher forex losses.
An analysis of results of 51 companies from the BSE 200 constituents by Edelweiss
Financial Services shows that, in the October-December quarter (Q3FY12), revenues grew
by a healthy 26.5% to Rs 2.99 lakh crore compared to Rs 2.36 lakh crore during the same
quarter of fiscal 2010-11. However, during the quarters being compared, net profit of these
companies grew by just 5.4% to Rs 37,823 crore from Rs 35,890 crore. On a quarter-on-
quarter basis, total revenues of these 51 companies, accounting for almost 50% of BSE
200‘s market capitalization, grew by 9.2% while net profit grew by a healthy 9.4%.
Another analysis by CARE Ratings of 444 companies showed that, while net sales during
Q3FY12 rose by a healthy 27.7% (Y-o-Y) and other income by a substantially higher 41.2%,
expenses increased much faster than sales — by 33.1%. ―High growth in raw material costs
has caused operating expenses to increase at a much faster rate than that in sales in this
period,‖ the report pointed out. As a result, net profit for these companies during Q3FY12
was actually down by a marginal 0.7%.


South dampens United Spirits
(Jan 30, 2012)
• Mumbai/Chennai: Vijay Mallya‘s spirits empire suffered a sharp erosion of sales in Tamil
Nadu, the country‘s largest branded spirits market, in a development that shows how even
the leader remains vulnerable in a heavily state controlled industry, said sources directly
familiar with the matter.
United Spirits (USL), the flagship of the beer-to-airline conglomerate UB group, saw
monthly market share plummet to 12% in December, down from over 20% in May last year.
USL volumes dropped to almost 5 lakh cases (of 9 litre each) from about 10 lakh.
Tamil Nadu‘s liquor market, which is tightly controlled by a state corporation, normally
sees a shake-up following any change of government, as it happened in last year‘s elections.
Excise duty collection from alcoholic beverages—estimated to touch Rs 22,000 crore in the
current fiscal—accounts for more than 25% of the budget revenue. Tamil Nadu State
Marketing Corporation (Tasmac) operates over 6,600 retail shops. Private participation is
limited to about 1,000 bars and about 90-odd clubs in the state.
The top brass of the world‘s largest spirits maker touched down Chennai to visit the
government after sales decline extended into December. For USL, it is unusual to be caught
in sudden policy quagmire like the one played out in Tamil Nadu recently. This probably
shaved off about 4 to 5 million cases in the company‘s growth projections in FY12, said
industry sources who added that sales started to recover in January and the company may
be exiting this month with 15% share of consumption in the state. Tamil Nadu contributes
almost 10% to its annualized volume sales.


WHAT’S UP

RBI blocks withholding tax-evasion route for FIIs (Jan 31, 2012)

• The RBI recently made a small change to how FIIs can trade in the government securities
market. The central bank said that an FII holding a particular government bond cannot sell
the security more than two times a year. Since withholding tax in India is very high, a large
number of FIIs usually sold a G-sec just before the day of interest payment and then bought
it back after the payment of interest. Since bond prices incorporate interest payments, FIIs
used to make profits using this route but hardly paid any tax. Since the government pays
interest on G-secs on a half-yearly basis, by changing the rules of FII trading in the bond
market, it expects to see some extra revenue inflows into the exchequer through this route.
Eureka Forbes consolidates water purifier business
Eureka Forbes, a pioneer in water purification systems, has consolidated its
manufacturing units to enhance operational efficiency. The maker of Aquaguard water
purifiers has merged Forbes Aquamall with the bigger Aquamall Water Solutions, thus
bringing its four facilities spread across Baddi (Himachal Pradesh), Bangalore, Bhimtal and
Dehradun (both in Uttarakhand) under one roof. Set up in 1984 under the name of Andhra
Pradesh Industrial Components, Aquamall Water Solutions has grown in scale and size
over the years, clocking in a turnover of over Rs 550 crore. The jewel in its network of
factories is the Dehradun facility, labelled as India‘ first green water purifier plant and from
where it rolls out a million units annually.


Govt to boost India Inc’s global M&As
Plans To Help Desi Cos Acquire Assets In SE Asia, Eastern Europe And Africa

• New Delhi: The government is no longer fighting shy of Indian companies
going for overseas acquisitions. Instead, it is preparing a plan aimed at
boosting foreign buyouts by smaller players.
Senior government officials told TOI that the department of industrial
policy and promotion (DIPP) has identified South East Asia, eastern Europe
and Africa as areas where it will assist Indian companies acquire assets as
well as companies. It is working out a detailed strategy that is expected to be
executed through Invest India, a public-private partnership initiative that
was originally aimed at boosting investment into the country.
According to the latest available data, during April-October 2011, foreign
direct investment (FDI) outflows from India were estimated at $25.3 billion,
while inflows were of the order of $20.3 billion. As a result, there was net
outflow of $5 billion despite a 28% decline in investments abroad and a 64%
jump in inflows from foreign investors.
During 2010-11, net outflows were of the order of $13.5 billion, with FDI
inflows of $30.4 billion. In terms of destination, Singapore, Mauritius and
the Netherlands were the favourite overseas places to invest, while services
accounted for 59% of the outflows and manufacturing for 28.6%.


Core sector growth slows to 3.1% in Dec (Jan 31, 2012)

• Core sector growth slows to 3.1% in Dec
• TIMES NEWS NETWORK
•
than the 6.3% expansion posted in 2010. Between April and December, growth rose 4.4%,
lower than 5.7% registered in the same year-ago period.
The eight infrastructure industries have a combined weight of 37.90% in the index of
industrial production. The industrial sector has been hit hard by high interest rates, rising
input costs and policy delays. Industrial output rebounded in November and rose an annual
5.9% after declining for the first time in two years in October. Economists said they
expected sluggishness in the industrial sector to continue for some time. New Delhi: The
country‘s key infrastructure sector rose 3.1% in December, much slower than the previous
month‘s upwardly revised 6.7%, pointing to sluggishness in the industrial sector.
Data released by the commerce and industry ministry on Monday showed the output in
eight key infrastructure sectors spanning coal, crude oil, natural gas, petroleum and
refinery products, fertilisers, steel, cement and electricity remained subdued in December.
Growth in December was also slower
―The sector has been impacted by policy delays. There has been some improvement in
rolling out policies but swift action is needed to boost growth,‖ said D K Joshi, chief
economist at ratings agency Crisil, adding that the core sector and industrial data had
remained volatile for a considerable period.
Monday‘s data showed the output in cement and electricity helped the overall numbers in
December. The cement sector registered a growth of 13.3% in December 2011 against a
decline of 2.2% in December 2010.


FUTURE SHOCK
Fidelity kicks off review of India mutual fund biz (Jan 31, 2012)

• Mumbai: Fidelity Worldwide Investment, which runs Fidelity Mutual Fund in India, is
conducting a strategic review of its India operation, which may eventually lead to a change
in the shareholding pattern of the asset management company (AMC). Usually every year,
Fidelity does a country-specific strategic review of all its businesses and the current review
is part of the same. However, this time it is more intense for its India operations, sources
said.
The strategic review is being done to find out the best valuation that the fund house can
get and, if the price discovered through this process is attractive, Fidelity Worldwide may
even decide to exit India. However, at the other end of the broad spectrum of options that
the global fund management major has is to continue with the current structure of 100%
ownership. ―It may even offload a partial stake to bring on board a local partner with a
strong distribution network,‖ an industrysource said.
When contacted, a spokesperson for Fidelity MF said that Fidelity Worldwide Investment
was conducting a strategic review of its onshore asset management business in India and,
as with strategic reviews, all options were being covered. ―The review is underway and it is
too preliminary to discuss any outcome. We remain fully engaged in and committed to the
process of successfully managing money for clients using all the resources of the company
as required. In addition, the outcome of this review will take full account of our fiduciary
duty to, and the interests of, our clients,‖ an email response from the fund house said.


Pranab rebuffs US on Iran, outsourcing
‘Won’t Reduce Oil Imports From Teheran’ (Jan 31, 2012)

• Washington: India‘s seniormost cabinet minister pushed back against the United States on
Sunday, rejecting pressure from Washington to curtail oil imports from Iran and
disapproving American political rants against outsourcing of jobs.
Finance minister Pranab Mukherjee, an old hand at USIndia dynamic who has also
handled the Commerce, Defense, and External Affairs ministry in his four-decade political
career, took the opportunity of a cultural sortie to US President hometown Chicago to
obliquely criticize Obama for encouraging protectionist tendencies, suggesting it would be
self-defeating and not in keeping with the times.
―There is no denying the fact that despite some aberrations, uninterrupted flow of goods
and services and removal of tariff and non-tariff barriers have yielded results for all...
Therefore, I do believe there is merit in giving up protectionism and I do hope that
countries will not resort to it,‖ Mukherjee told reporters in Chicago at the end of a weekend
visit to commemorate events relating Swami Vivekananda and Rabindranath Tagore's
travels to the US.
The backdrop of Mukherjee‘s disapproval was the tirade by President Obama against
American companies that ship jobs overseas. Although Obama did not mention India by
name, he has frequently invoked the country --which has been a beneficiary of low-cost
arbitrage by American businesses trying to improve their bottom-line under pressure from
US stockholders -- as an example that undermines US economic primacy. ''Protectionism
ultimately does not help the country that resorts to protectionism,'' Mukherjee said, using a
refrain the US itself has frequently employed against India, which is also accused of
protectionism in areas such as opening its multibrand retail markets to foreign
competition.


Govt will infuse 7,900 cr into SBI
Takes Preferential Route For Capital Infusion, Bank’s Rating May
Improve (Jan 31, 2012)

• Mumbai: In a move that will help country‘s largest lender State Bank of India to improve its
creditworthiness and lend more, the government has agreed to infuse Rs 7,900 crore into
the bank through a preferential issue.
In a statement to the stock exchange, the bank said that the government on Monday
approved increase in SBI‘s issued capital by way of preferential allotment of equity shares
of about Rs 7,900 crore. Following the infusion there is a possibility that the outlook for the
bank‘s rating, which was downgraded by Moody‘s in October, could improve. One of the
grounds for Moody‘s downgrade was that the bank‘s tier-1 capital adequacy ratio had
slipped to 7.60%. The capital infusion will improve CAR to beyond 9%. The announcement
came after market hours on Monday, when the sensex fell 2% to 16,863. Earlier during
trading hours SBI‘s share price had also fallen 2.5% to Rs 1,990.
When asked whether the bank would seek a review of its credit rating, Pratip Chaudhuri,
chairman, SBI said: ―We are waiting for the funds to come into our books. In any case we
are not too worried about the rating.‖ He added that the government‘s stake in the bank,
which is around 59.4% would rise to around 62%. The advantage of an increase in
government stake is that the bank will have headroom to issue equity to private investors
without fear of government stake falling below mandatory levels. ―The tier-1 capital
adequacy will depend on the asset growth, but it should be around 9% on March 2012,‖ said
Chaudhuri.


Govt’s fiscal health keeps worsening
Deficit In April-Dec At 92% of FY12 Estimate On Subsidies, Poor Tax
Mop-Up
(Jan 31, 2012)

• New Delhi: More evidence about the tight fiscal situation emerged on Tuesday as data
showed the deficit between April and December had — at Rs 3.81 lakh crore — reached
92.3% of the 2011-12 estimate. It stood at 44.9% of the 2010-11 target in the corresponding
period of the previous fiscal year.
Tuesday‘s data, released by the Controller General of Accounts, showed that the deficit
situation in December was the highest since the same period in 2008 when it stood at
163.8% of the fullyear target, largely due to the fiscal stimulus provided by the government
to boost the economy.
Sluggish tax revenues, rising spending commitments and subsidies have hurt the
government‘s fiscal situation. Volatile market conditions have dashed hopes of raising Rs
40,000 crore from stake sales in state-run companies.
So far, the government has raised Rs 1,145 crore from the stake sale in Power Finance
Corporation. Experts say the government must unveil a credible fiscal consolidation plan in
the 2012-13 Budget, which is likely to be unveiled in mid-March.
Net tax revenues up to December stood at 63.3% of the 2011-12 target, compared to
73.2% in the same period last year. This shows the sluggishness in tax revenues due to the
economic slowdown. The government has already said it will be a difficult task to meet the
fiscal deficit target of 4.6% of gross domestic product (GDP) for this year.
Efforts are on to garner cash. The Centre is banking on higher dividends from state-run
companies. Finance ministry officials and economists say the fiscal deficit this year is
expected to be around 5.2% to 5.8% of GDP.
•


CURRENT PRICE AS BAROMETER
Per capita hits 53k at current prices
(Jan 31, 2012)

• New Delhi: The per capita income of Indians for the first time crossed the Rs 50,000-mark
in 2010-11, although using current prices as the barometer. According to the revised GDP
data for the last financial year, per capita income is estimated to have risen 16.9% to Rs
53,331 compared to Rs 46,117 in the previous year.
The $1,000-average income of Indians is seen to be illusionary in economic circles as
economists prefer to use factor cost to weed out the impact of inflation. Based on 2004-05
prices, per capita income saw a modest 6.4% increase and reached Rs 35,993 in 2010-11,
compared to Rs 33,843 in the previous year. ―Due to the inflationary conditions last year,
the nominal per capita has shown a big jump. It does not matter much. What matters is the
increase in per capita in 2004-05 prices, which is growing at 6.4%. The Rs 50,000-mark is
not a great milestone to celebrate,‖ said N R Bhanumurthy, professor at National Institute
of Public Finance and Policy.
Based on current prices, GDP rose by 18.8% in 2010-11, data released by the Central
Statistics Office on Tuesday showed. But it is the real GDP—which factors in the impact of
inflation—that is used to gauge economic expansion. By that measure, the Indian economy
grew 8.4%, the revised numbers showed. ―Real GDP growth is outstripping population
growth so per capita income has been on the rise. Nominal incomes are rising due to the
high inflation,‖ said D K Joshi, chief economist at ratings agency Crisil. According to the
World Bank classification, India is a lower middle-income country. At around Rs 36,000 a
year – or $720 – this translates into average income of less than $2 a day.


Sensex, Rupee post best Jan gain in yrs
Positive Impact From Strong Q3 Nos, FII Buying (Jan 31, 2012)

• Mumbai: A strong quarterly result from ICICI Bank that beat analysts‘ estimates, backed by
a revival in foreign fund buying, helped the sensex regain most of Monday‘s losses to end at
17,194, up 330 points. With a 2% gain for the day, the total gain for the month of January
added up to 11.3%, making it the highest gain in January in the last 18 years. The gains
came on the back of a $2.1-billion net foreign fund inflow for the month, a series of strong
results and improved global market sentiments.
The strong rally in the equity market, backed by FII buying, also had a positive impact in
the foreign exchange market with the Indian rupee gaining almost 7.5% during the month
to its Tuesday‘s close of 49.46 to a dollar —again, the best January gain in the last 17 years.
Tuesday‘s rally was boosted by a strong 20% rise in net profit by ICICI Bank, and also the
news that the government has pledged nearly Rs 7,900 crore to pick up shares in the
banking major SBI, which in turn may help it improve its credit ratings, dealers said. ICICI
Bank closed 5.9% higher at Rs 902 while SBI closed 3.5% up at Rs 2,061. Boosted by the
leaders in the banking segment, the banking index on BSE, Bankex, closed 3.8% higher.
The day‘s rally was also boosted by strong foreign fund buying with end-of-the-session
data on BSE showing a net FII inflow at Rs 624 crore, although domestic institutions
continued their selling, recording a net outflow of Rs 241 crore for the day. Institutional
dealers said with the Greece sovereign debt negotiations with private creditors nearing
apositive closure by the end of the week, foreign funds were willing to buy risky assets.


RELIEF FOR USERS
Under pressure, CIL pares prices by 12.5%

• New Delhi: Pressure on power utilities to raise electricity charges immediately will ease as
state-run monopoly Coal India (CIL) on Tuesday pared coal prices by 12.5% by delinking
domestic pricing from international markets.
The new pricing regime will be effective retrospectively from January 1, when the
company had switched to a system of grading various types of coal on the basis of GCV
(gross calorific value, or how much heat a unit of coal can produce). The GCV system did
not account for ash and moisture content as in the earlier system based on the UHV (useful
heat value). The move drew a howl of protest from power producers and other user-
industries.
TOI first reported CIL board‘s move to pare prices on Tuesday. The board had on
Monday met here under orders from coal minister Sriprakash Jaiswal to re-examine its
pricing structure. The instructions came after the power ministry warned of steep hikes in
electricity tariffs, thanks to CIL‘s new pricing. Jaiswal, however, said the company will
continue with the GCV-based pricing system in a revenueneutral manner. The government
will reassess the reduction in prices after March.
CIL stock dropped about 3% as the company will now have to forego a windfall of,
according to power ministry‘s estimates, Rs 28,000 crore without raising output. In the
new system, coal has been differentiated in 17 grades against seven in the junked system.
The prices, too, have risen between 50% and 180% as per respective grades.


Binani buys Belgium co for 1,781cr (feb. 1, 2012)

• Mumbai: Binani Industries, the holding company of Braj
Binani group, has acquired a Belgian fibreglass company, 3B,
for Euro 275 million, which at Wednesday‘s exchange rate
translates to Rs 1,781 crore. 3B is a Europe-based major in
fibreglass products and technologies. The Indian acquirer has
interests in cement, zinc, glass fibre, composites and ready-
mix concrete. The Braj Binani group has acquired 100% equity
interest in 3B from Platinum Equity, a private equity firm, a
release from the company said.
Headquartered in Battice, Belgium, 3B is Europe‘s leading
manufacturer of fibreglass for reinforcement of
thermoplastics and thermoset polymer applications, and is a
preferred supplier to global leaders in industries, including
automotive and wind energy.
•


Insurers force auto makers to bring down repair costs (feb. 1,
2012)

•
Mumbai: After bargaining with hospitals to reduce costs, general insurers have turned to the auto
industry to bring down cost of repairs, most of which is paid for by the insurance industry. The good news
is that auto companies have responded positively with the cooperation expected to dramatically bring
down cost of repairs.
In recent years, individual private companies have developed the scale and the statistics to negotiate
with auto manufacturers. Bajaj Allianz, which insures over 15 lakh cars, has been sharing its claims data
with insurers for several years and has been recommending changes in processes. The company has
convinced auto manufactures to make small changes which include supply of ―child‖ parts, inclusion of
antitheft devices in low-end models and getting service centre to have high-end dent removing
equipment.
Getting big manufactures like Maruti and Hyundai to supply child parts has been a major victory as it
drastically brings down cost of repairs. For instance earlier, damage to the headlight lens required the
assembly to be replaced. This was expensive given that modern headlights include motor driven levelers
which are expensive. ―We told them that if they do not supply child parts, the cost of ownership of the car
goes up because of the higher premium,‖ said Hemant Kaul, CEO, Bajaj Allianz General Insurance.
Vijay Kumar, an auto industry veteran, and head of motor at Bajaj Allianz General Insurance, points out
that the cost of a door in a Honda City is around Rs 13,000. If in a four-year car a dented door is replaced,
the owner would have to bear half the cost because of depreciation.
But if the dealer had hitech dent removal equipment the repairs would be done at Rs 2,000 which
would be paid in full and everyone would benefit.
One of the shortcomings of the public sector was their inability to come up with comprehensive
statistics on repairs. But now all private companies are making use of data and approaching
manufacturers.
Besides bargaining on costs, insurers have also been providing feedback to manufacturers on the
demand for spares across the country.


Manufacturing in January grows fastest in 8 months
Domestic, Global Clients Give Boost To Orders (feb. 2, 2012)

• New Delhi: The country‘s manufacturing sector expanded at its fastest pace in eight months in January on
the back of a sharp increase in new orders, a survey showed on Wednesday. The seasonally adjusted
HSBC Purchasing Managers‘ Index (PMI) — a headline index designed to measure the overall health of
the manufacturing sector — registered 57.5 in January, up from 54.2 in December. The latest reading
pointed to the strongest improvement in business conditions since May 2011, the survey showed. The 50-
point mark separates growth from contraction.
The PMI survey is based on data compiled from monthly replies to questionnaires sent to purchasing
executives in over 500 manufacturing companies. Manufacturers reported a further increase in new
business received during January. The rate of expansion accelerated for second month running. Overall
improvement in demand and market conditions had led to the rise in new order volumes.
Growth of new export business also accelerated in the latest survey period, but to a lesser extent.
Anecdotal evidence suggested that difficult economic conditions and increased competition in some
markets had limited gains in new export orders, the survey said. ―Activity in the manufacturing sector
rebounded again in January led by higher demand from both domestic and foreign clients, suggesting
some recovery in sentiment in recent months,‖ said Leif Eskesen, chief economist for India and Asean at
HSBC.
Official data showed that growth in the industrial sector improved in November after plunging in
October. Output in the country‘s factories, mines and utilities rose 5.9% in November after October‘s
decline. Latest data for the eight key infrastructure industries shows that growth still remains sluggish, hit
by high interest rates and rising input costs. Data for the sector has remained volatile for a significant
period, economists and analysts said.
The survey showed input prices faced by Indian manufacturers increased substantially in January.
Higher raw material costs were cited as the main driver of input price inflation.


Govt plans tax on commodity trading
In Line With STT, Levy Aimed At Checking Speculation In Non-Farm

Goods (feb. 2, 2012)

• New Delhi:The finance ministry is keen to introduce a commodities transaction tax (CTT)
in the Budget to check speculation in non-farm goods despite opposition by exchanges and
industry chambers. Sources told TOI that the assessment in North Block is that the move
will not impact farmers but may help stabilize the commodity futures market, where more
than half the volumes are generated through trade in silver, gold, oil and gas.
Some of the oil contracts approved by regulator Forwards Market Commission (FMC) are
such that there is no possibility of delivery outside the US and are only seeing speculative
trading behaviour. Contracts such as Brent do not see sufficient interest, market players
admitted. They also acknowledged that there was more interest in contracts that were for
the near month, while those of longer duration saw activity closer to the maturity date.
Futures are contracts with a duration of three to six months meant to help market
players, especially farmers, hedge against risks. In the Indian market, however, it is often
seen as a product where speculation is taking place. To guard against such behaviour, in
most farm products, the government has introduced compulsory delivery on maturity of the
contract. ―It is not going to affect farmers in any way, as is being argued by interested
parties,‖ the source said.


Bajaj Auto sales up 7% in January (feb. 2, 2012)

• NEW DELHI: The country's second largest two-wheeler maker Bajaj
Auto today reported 6.83% increase in its motorcycle sales in
January at 2,94,439 units, the highest ever for the month.
The company had sold 2,75,622 units in the corresponding month
last year, Bajaj Auto Ltd (BAL) said in a statement.
BAL said exports grew 13.01% during the month at 1,16,996 units
compared to 1,03,526 units in January 2011.
• In the three-wheeler category, company said its sales stood at
43,436 units as against 37,961 units in the same month last year,
registering a jump of 14.42%.
Total vehicle sales of the company in the last month stood at
3,37,875 units compared to 3,13,583 units in the same period a year
ago, a growth of 7.75%, the statement said.


NALCO raises aluminium prices by Rs 2,000/tonne (feb. 2, 2012)

• BHUBANESHWAR: State-run metal producer
National Aluminium Co Ltd (NALCO) has raised
aluminium prices by Rs 2,000 ($40.8) per tonne
across all products, said Ansuman Das, commercial
director at the company.
The price was revised for the domestic mark after
prices rose overseas, he told Reuters on Thursday.
The basic price of standard aluminium ingots after the
latest revision has been increased to 140,700 rupees
per tonne. Nalco last raised aluminium prices on Jan.
13, when it had increased them by 1,500 rupees per
tonne.


Foreigners can now invest directly in Indian stocks
(feb. 2, 2012)

• NEW DELHI: The government on Sunday gave a New Year gift to the stock markets by allowing qualified
foreign investors (QFIs), including overseas individuals, to invest directly in Indian stock markets. So far,
QFIs were permitted to invest only in mutual fund schemes.
"As a next logical step, it has now been decided to allow QFIs to directly invest in the Indian equity market
in order to widen the class of investors, attract more foreign funds and reduce market volatility and to
deepen the Indian capital market," the finance ministry said in a statement. Detailed norms are expected
to be issued by the Securities and Exchange Board of India (Sebi) over the next two weeks.
By allowing QFIs, the government is opening a new avenue for investment, earlier controlled by foreign
institutional investors. Foreign nationals, who wanted to invest in Indian stock markets, came through
the sub-account route. Non-resident Indians were, however, permitted to invest directly.
• "In this arrangement, a large number of Qualified Foreign Investors, in particular, a large set of
diversified individual foreign nationals who are desirous of investing in Indian equity market do not have
direct access to Indian equity market. In the absence of availability of direct route, many QFIs find
difficulties in investing in the Indian equity market," the finance ministry said.
The move comes at a time when FIIs are withdrawing from Indian equity markets due to problems in
their domestic markets.
• So far, qualified foreign investors were permitted to invest only in mutual fund schemes.


Iran accepts 45% of India oil sales in rupees: Report
(feb. 2, 2012)

• NEW DELHI: Iran has agreed to be paid 45 percent of revenue from its
Indian oil exports in rupees, to be deposited with an Indian bank beyond
the reach of new US and European sanctions, a report said Thursday.
The two countries have chosen UCO Bank, headquartered in the eastern city
of Kolkata, for the rupee transactions to settle part of India's $12.68-billion
annual oil bill, The Indian Express reported.
India currently pays for 20 percent of its oil imports from Iran in rupees,
with the remainder settled in euros at the Turkish bank, Turkiye Halk
Bankasi.
• There are concerns that the Turkish route will be closed by tough new
European sanctions on oil exports from Iran imposed over the Islamic
Republic's disputed nuclear programme.
India has said it will continue to buy crude from Iran despite moves by the
US and Europe to further isolate the country, which accounts for 12 percent
of India's annual oil imports.


Obama presents mortgage refinancing plan

• WASHINGTON: President Barack Obama Wednesday presented a plan to revitalize the US real estate
market that would allow millions of homeowners to refinance their mortgages and take advantage of the
current historically low interest rates.
Due to the precipitous decline in housing prices in recent years, more than 10 million homeowners now
owe the bank more money than their houses are worth, the president emphasized.
The housing crisis "struck right at the heart of what it means to be middle class in America: our homes",
Obama said at a community center in Falls Church, Virginia.
• Many families have had to resort to getting help from public programmes to avoid losing their homes, but
up to now those initiatives have been unable to handle the enormous scope of the problem.
The plan presented Wednesday seeks to benefit more than a third of the 10 million homeowners whose
mortgages are underwater, the White House says.
"Responsible" owners who are current on the payment of their mortgages will be able to refinance them at
lower interest rates, meaning that they can save an average of about $3,000 per year, the president said.
In addition to refinancing the mortgages, Obama's new plan also includes more protection to avoid
inappropriate evictions, the sale of foreclosed properties by government agencies so that private investors
who pledge to rent them out can do so and greater indulgence for homeowners who lose their jobs.
Obama urged Congress to approve the plan, the cost of which is estimated to be between $5 billion and
$10 billion.


Armani to enter desi homeware market (feb. 2, 2012)
• MUMBAI: Iconic Italian luxury brand Giorgio Armani is looking to bring its high-end homeware and furnishings retail stores to
India in the next one year. A senior executive from the group told TOI that talks were ongoing with potential local partners even
as the group scouts for retail spaces to open its Armani Casa outlets in India.

The luxury group, which has an existing joint venture partnership with DLF Retail, a subsidiary of the real-estate major DLF, for
its fashion business is not likely to extend the tie-up for the Casa brand.

The lifestyle luxury market is evolving rapidly in Asia's third largest economy on the back of growing disposal incomes and
consumer awareness. Last year, another luxury powerhouse Versace had opened its first standalone home furnishing store in
partnership with New Delhi-based Blues Clothing.

For now, the Indian homewares market, including furnishing, furniture and home decor, is estimated to be Rs 80,000 crore
growing at 10-12% annually - this includes largely domestic players operating at the mid-tier range. On the other hand, the
luxury market in India witnessed a robust growth of 20% over the past year and is estimated to have reached $5.75 billion in
2010, according to an AT Kearney-CII report.

Industry sources said Armani had earlier shown interest in tapping the luxury interiors market when it entered India in 2008
but the plan did not take off then. Armani Casa is currently designing interiors for Mumbai-based real estate developer Lodha
Group's ambitious 'World One' project.


• In an exclusive chat with TOI, Fabrice Gouffran, director, Armani Casa, said, "We have
done very well with our fashion line and the potential of our home products should be huge
looking at the rising demand for luxury here." Armani Casa registered a 10% growth in its
business in 2010, largely due to the performance of the Asian market in particular China
where it has 10 stores.
Armani Casa is currently present in 67 stores globally across 45 countries both through
branded and shop-inshop formats. "This high-end, luxury segment of the market is pretty
much under penetrated and the entry of an international brand will only help to grow the
space. Indian consumers have increased spends on home decor and are looking for
options," said Neelesh Hundekari, principal at consulting firm AT Kearney.
The Indian government has opened the single-brand retail sector completely, albeit with a
clause of 30% mandatory local sourcing. This is one of the issues that has been quoted as a
deterrent by many brands waiting to enter India.
"We think a local partner may be important to set up our business here as you need local
knowledge in a market like India," Gouffran added.
The Armani Casa Interior design studio was launched eight years ago to provide clients -
both private and property developers - with home design solutions.


Government to infuse Rs 18,000 cr in 12 PSU banks in 2011-
12 (feb. 2, 2012)

• NEW DELHI: The finance ministry will be infusing Rs 18,000 crore in the current fiscal in 12 banks,
including SBI, and will be seeking supplementary grants from Parliament in the budget session.
"There are 12 banks in which we will infuse money in 2011-12. The amount will be Rs 18,000 crore. This
includes Rs 7,900 crore for State Bank of India (SBI)," sources said.
Besides SBI, other lenders that would be given capital support in the fiscal include Punjab National Bank,
Central Bank of India and Bank of Baroda.
• The government would seek supplementary demands for grants to the tune of Rs 14,000 crore for
recapitalising PSU lenders in the Budget session, which is likely to begin sometime next month.
Earlier this week, the government had approved capital infusion of Rs 7,900 crore in State Bank of India
(SBI) and Rs 1,285 crore in PNB through preferential issue of shares.
The capital infusion in banks would help the lenders increase their business.
In 2010-11, the government provided capital support of Rs 20,157 crore to public sector banks.
Most of the public sector banks got capital support from the government last fiscal. These include Punjab
National Bank, Bank of Baroda, Union Bank of India, Oriental Bank of Commerce, UCO Bank and Dena
Bank.


Oil cos resume jet fuel supplies to Air India (feb. 2,
2012)
• NEW DELHI: State-owned oil companies have resumed jet fuel supplies to Air India after the national
carrier promised to pay Rs 268 crore in dues tomorrow.
Oil company officials said the supplies are being resumed after Air India promised to clear dues by
tomorrow evening.
All the three oil companies - Indian Oil, Bharat Petroleum and Hindustan Petroleum - had jointly stopped
Air Turbine fuel (ATF) supplies to Air India at Delhi, Mumbai, Kolkata, Chennai, Trivandrum and Kochi
from 1600 hours today.
• The carrier had failed to honour payments even after 90-day credit period.
Earlier in the day, Civil Aviation Secretary Nasim Zaidi told PTI that he had asked the petroleum secretary
to not stop the jet fuel supply to the carrier.
"I have spoken to the Petroleum Secretary not to disrupt (aviation turbine fuel) supplies and he has
assured," Civil Aviation Secretary Nasim Zaidi said.
Zaidi said the cash-strapped carrier had just paid Rs 180 crore, and Rs 40 crore would be released
tomorrow and another Rs 40 crore soon.
Senior Air India officials have claimed that the airline owed Rs 260 crore to the oil companies for the
credit period and "we are well within the credit limit."
Overall, Air India owes over Rs 4,170 crore to public sector oil companies in unpaid jet fuel bills,
according to figures tabled in Parliament.
The oil companies decided to stop ATF supplies saying Air India had not honoured its commitment to
make payments for jet fuel it bought from the oil companies even after expiry of 90 day credit period.
"The government had last year asked us to give a 90-day credit period to Air India, which we diligently
did. As per that, payments for ATF sold to Air India in mid-October was due on January 22 but it did not
make any payment," an oil company official said.


Telecom scrips push Sensex higher(feb. 2, 2012)
• MUMBAI: Indian equities markets onThursday were trading higher in the afternoon
backed by gains in established telecom scrips, which were expected to gain after the
Supreme Court cancelled 122 licences issued in 2008 by then communications minister A
Raja.
• The 30-scrip sensitive index ( Sensex) of the BSE, which opened at 17,438.07 points, was
ruling at 17,470.70 points, 170.12 points or 0.98 percent up from its previous close at
17,300.58 points.
• The 50-scrip S&P CNX Nifty of the National Stock Exchange was also trading in the green
at 5,275.15 points, up 39.45 points or 0.75 percent from its previous close.
• Gainers were mainly led by telecom firms. The BSE telecom index was leading 13 sectoral
indices.
• Prominent gainers on the benchmark index and from the telecom space included: Bharti
Airtel, up 7.85 percent at Rs.389.45; Idea, up 3.96 percent at Rs.97.05 and MTNL, up 2.66
percent at Rs.30.90.
• The Supreme Court said the companies whose licences stand to be cancelled will continue
to offer their services for four months during which time the telecom regulator will look
into the matter and make recommendations for the fresh auction.
• Broader markets were ruling higher as well, with the BSE 500 index trading 0.81 percent up
from its previous close. The BSE midcap index was up 0.53 percent while the BSE smallcap
index gained 0.58 percent.
• The market breadth was positive with 1,466 stocks advancing, 1,152 on the decline and 111
unchanged.
• Asian markets were ruling in the green.
• The Japanese Nikkei gained 0.76 percent and closed at 8,876.82 points, while Hong Kong's
Hang Seng gained 1.66 percent to trade at 20,671.42 points.
• The Chinese Shanghai Composite index was ruling 1.89 percent higher at 2,310.94 points.


2G verdict: A Raja 'virtually gifted away important national
asset', says Supreme Court
(feb. 2, 2012)

• NEW DELHI: In a huge embarrassment to the government and a jolt to the telecom sector,
the Supreme Court today cancelled 122 2G licences granted during the tenure of former
telecom minister A Raja declaring it as "illegal" and blamed the government's flawed first-
come-first served policy.
Bringing the curtains down on the controversial allocation by Raja in 2008, the court
strongly indicted him over the manner in which he manipulated the issue of licenses and
ordered that the licenses in 22 circles be sold by auction for which the Ttai will make fresh
recommendations.
A two-judge bench comprising justices G S Singhvi and A K Ganguly allowed the impugned
licenses to run for four months after which the cancellation order will become operative.
The court imposed heavy costs of Rs five crore on Etisalat DB Telecom Pvt Ltd ( Swan
Telecom Ltd), Unitech Wireless Group and Tata Teleservices Ltd, who were benefited by a
"wholly arbitrary and unconstitutional" action of award of licenses to them and for off-
loading their stakes for many thousand crores in the name of fresh infusion of equity or
transfer of equity.
It ordered Loop Telecom Pvt Ltd, S-Tel, Allianz Infratech and Sistema Shyam Tele Services
Ltd, who were also beneficiary of the decision, to pay a cost of Rs 50 lakhs each.


RCOM mobile unit head Safawi quits
(feb. 2, 2012)

• MUMBAI: In a sudden management realignment at Anil
Ambani's Reliance Communications (RCOM), Syed Safawi,
president of its wireless business , has exited the company.
Sources in the company, who did not want to be named, said
the performance of the telco under Safawi's leadership did not
match up to expectations therefore his contract, which expired
in December 2011, was not renewed. RCOM has been under
the burden of heavy debt along with losing revenue market
share.
RCOM said it has merged its geographical units and all its
geographical heads will report to Shamik Das, the joint
president and COO of the company. This will be an interim
arrangement, said sour ces.


ICICI Bank surges 6% on strong Q3 earnings (feb.
2, 2012)

• MUMBAI: Shares of ICICI Bank today jumped nearly 6 per cent, after the country's largest
private-sector lender reported 20 per cent growth in net profit for the third quarter ended
December.
Investors flocked to buy ICICI stock at the BSE pushing up its price by 5.87% to Rs 902.
Intra-day, the scrip that is among top heavyweights on Sensex zoomed 6.39%.
Hectic buying was also seen at the company's counter on the National Stock Exchange
(NSE), where the stock closed at Rs 901.65, up 5.80% from the previous close.
• ICICI Bank was the second best performer among the 30- sensex blue-chips after Hindalco.
It alone contributed more than 69 points to the overall stock market rally as the BSE index,
sensex, closed 330.25 points up.
The company reported 20% growth in net profit for the December quarter at Rs 1,728.10
crore, as against Rs 1,437.02 crore for the same period last fiscal.


All private banks to handle govt businesses as
agents: RBI (feb. 1, 2012)
• MUMBAI: The Reserve Bank said all private sector banks will now be
eligible to handle central and state government business as agents of the
central bank, at par with public sector banks.
So far, the facility was limited to only three private sector -- ICICI Bank,
HDFC Bank and Axis Bank.
"... it has been decided that all private sector banks will now be considered
eligible to handle any Central/State Government business (where RBI pays
agency commission) at par with public sector banks," RBI said in a circular.
• It said the decision is aimed at enhancing the quality of customer service in
government business through more competition.
The move will improve customer convenience by increasing the number of
customer service outlets and broad basing the revenue collection and
payments mechanism of governments, the central bank said.
The new rule comes with immediate effect, the RBI said.


'Fiscal deficit for 2011/12 seen at 5.6% of GDP' (feb.
2, 2012)

• NEW DELHI: India's fiscal deficit is likely to be about one
percentage point higher than the budgeted 4.6 percent of
gross domestic product in the current fiscal year that ends in
March, M Govinda Rao, an economic adviser to the Prime
Minister, said on Wednesday.
The fiscal deficit during April to December reached 92.3
percent of the full-year target, government data showed on
Tuesday.
Rao's forecast matches with the view held by many private
economists who had warned that the deficit for the year would
overshoot the budgeted target by a full percentage point on
slowing growth and weak federal finances.


Govt revises 2010-11 GDP to 8.4% from 8.5% (feb. 2,
2012)

• NEW DELHI: The Indian economy grew 8.4% in 2010-11, marginally lower than the previous estimate of
8.5%, on the back of strong farm sector and services sector growth, data showed on Tuesday. The Central
Statistics Office (CSO) released the quick estimates of national income, which showed that the farm sector
grew 7% in 2010-11, while the services sector, which accounts for more than 52% of the economy, rose
9.3%.
"The 8.4% expansion in the gross domestic product (GDP) during 2010-11 has been achieved due to high
growth in transport, storage and communication (14.7%), financing, insurance, real estate and business
services (10.4%), trade, hotels and restaurants (9%) and construction (8%)," the CSO statement said.
"At constant prices, the primary sector, ie agriculture, forestry and fishing, has shown a high growth of 7%
during 2010-11 as against 1% during the year 2009-10. The growth rate of secondary sector is 7.2% and
that of the service sector is 9.3% during 2010-11," the statement added.
• The Indian economy, Asia's third-largest, has slowed in recent quarters due to the impact of the global
slowdown, stubbornly high inflation and high interest rates. Policymakers say growth in 2011-12 is
expected to be close to 7%.
On Tuesday, C Rangarajan, chairman of the Prime Minister's Economic Advisory Council, said growth is
likely to be around 7-7.25% in the current fiscal year, slower than 8.4% registered in 2010-11. He also said
it would be difficult for the government to meet the fiscal deficit target of 4.6% in 2011-12. "The overall
growth rate in industry will be well below the initial expectations. The world economic situation is also
not very encouraging," he told a meeting of the industry lobby group Assocham.
Kaushik Basu, chief economic adviser in the finance ministry, said he expected growth in the 2011-12
fiscal year at slightly above 7% and the economy likely to post faster growth in 2012-13.


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