New Delhi, December 9
The government lowered its full-year growth forecast on Friday amid slowing domestic and global demand, with officials warning the government was facing a serious balance of trade problem and will have a tough time meeting its fiscal deficit target.

Asia's third-largest economy is now expected to grow by 7.25 to 7.5 percent in the fiscal year ending next March, the government said in a midyear review, down sharply from an estimate of 9 percent issued in February.

The slowing economy has put government finances under further stress, fueling a recent selloff in the rupee. While tax receipts so far have lagged the budgeted estimates, expenditures are climbing at a faster clip.

"There can be no denial that meeting the target (of fiscal deficit) will not be easy this year," the finance ministry said in its review, without giving a revised forecast.

Slowing demand for Indian merchandise in overseas market is also making the government uncertain about achieving its annual export target of $300 billion.

"There is clear evidence of a deceleration in exports growth," said Rahul Khullar, trade secretary, after releasing the provisional trade data for November. "There’s a serious balance of trade problem."

Net tax revenues have grown at just 7.3% year-on-year in the first 7 months of fiscal 2011-12. — Reuters

Brussels, December 9
Europe divided on Friday in a historic rift over building a fiscal union to preserve the euro, with a large majority of countries led by Germany and France agreeing to move ahead with a separate treaty, leaving Britain isolated.

Twenty-three of the 27 leaders agreed to pursue tighter integration with stricter budget rules for the single currency area, but Britain said it could not accept proposed amendments to the EU treaty after failing to secure concessions for itself.

After 10 hours of talks, all 17 members of the euro zone and six countries that aspire to join resolved to negotiate a new agreement alongside the EU treaty with a tougher deficit and debt regime to insulate the euro zone against the debt crisis.

"Not Europe, Brits divided. And they are outside of decision making. Europe is united," Lithuanian President Dalia Grybauskaite said in blunt English on arriving for the second day of the bloc's eighth crisis summit this year.

European Central Bank president Mario Draghi called the decision a step forward for the stricter budget rules he has said are necessary if the 17-nation euro zone is to emerge stronger from two years of market turmoil.

"It's going to be the basis for a good fiscal compact and more discipline in economic policy in the euro area members," Draghi said. "We came to conclusions that will have to be fleshed out more in the coming days."

German Chancellor Angela Merkel said she was very satisfied with the decisions. The world would see that Europe had learned from its mistakes and avoided "lousy compromise", she said. — Reuters

New Delhi, December 9
India's exports rose by 33.2 per cent to US $192.7 billion in the first eight months of 2011-12 while imports during the same period increased to $309.5 billion, resulting in a trade deficit of $116.8 billion, commerce secretary Rahul Khullar said Friday.

Exports in November stand at $22.3 billion and imports at $35.9 billion, creating a trade deficit of $13.6 billion.

Talking to reporters here, Khullar said India's exports have registered healthy growth so far this year despite a turmoil in the global economy.

"Growth in exports is still good," he said.

Petroleum and oil products and engineering goods have led the exports' growth.

Other sectors that have done well include cotton fabrics madeups, 13.7 percent up at $4.4 billion; electronics, 17 percent up at $5.83 billion; readymade garments, 28 percent up at $8.4 billion.

Exports of basic chemicals grew by 34 percent at $6.7 billion, drugs, 21 percent, at $7.9 billion and gems and jewellery, 56.5 percent increase at $30.1 billion. — Agencies

Mumbai, December 9
The benchmark Bombay Stock Exchange Sensex extended losses to the second day and closed 1.7 per cent lower on Friday as concerns over a slowdown in the economy intensified after the finance ministry cut the country's growth forecast for the current fiscal year.

The 30-share BSE index fell 274.78 points to 16,213.46, with 27 of its components in the red. It fell as much as 2% during the day. The index lost 3.76% for the week.

Shares of index heavyweight Reliance Industries led the losses and fell nearly 3% to end at Rs 755.70, their lowest close since Nov 25. Nomura downgraded the stock to "neutral" from "buy," citing diminishing exploration and production possibilities, and declining refining margins.

"The market has over-reacted to the midterm review. The lower GDP projections were already known and there is nothing new that you can derive from the review," Kishor Ostwal, chairman & MD, CNI Research, said.

"The market should bounce back next week before the RBI reviews its policy on Friday," he said, adding he saw 5,100 as next support level for the Nifty.

The Reserve Bank of India is widely expected to pause its rate tightening cycle next Friday at its monetary policy review as a slowing economy and a fragile global economic environment take centre stage.

Appetite for riskier assets was hit further after India's trade secretary Rahul Khullar said the country was facing a serious balance of trade problem.

Private lender ICICI Bank and HDFC Bank fell 1.77 per cent and 2.2 per cent, respectively. — Reuters

Brokerage Macquarie said it would continue to be bearish on the Indian banking sector because of deteriorating asset quality and a possible tightening of margins due to an increase in savings rate.

A slew of economic data, including industrial output and headline inflation, is expected next week and will influence stock market moves. — Reuters

New Delhi, December 9
Despite private sector banks launching aggressive marketing schemes to attract investments, the Indian postal department has been able to improve its savings record by attracting more investments.

With government schemes remaining a safe bet for the investors, India Post through its offices managed to collect Rs 274,720 crore during 2010-11 in small savings schemes. This was an increase of 8.78 percent over Rs 250,931 crore during the previous year, information available here said.

According to minister of state for communications & IT Sachin Pilot, "The gross collection under various Post Office small savings schemes during 2009-10 and 2010-11 were Rs 250,931 crore and Rs 274,720 crore (provisional), respectively". The gross collection has registered an increase of 8.78% as compared to the previous year's collections, officials said.

According to Pilot both central and state governments have been taking various measures from time to time to promote and popularize small savings schemes through print and electronic media, seminars, meetings and providing training to various agencies involved in mobilizing deposits under these schemes.

Incidentally, in an effort to further boost the investment in government backed schemes, the finance ministry recently also launched a new National Saving Scheme (NSC) with a 10-year maturity effective from December 1, which will earn annual compound interest rate of 8.7%.

"Investments in certificate will earn interest at the rate of 8.7% per annum, compounded semiannually," an official statement had recently said.

The certificate will be available in the denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000. There is no upper limit for investment in the scheme. NSC is a popular saving instrument for people who invest to save tax.

Under the new scheme, on investment of Rs.100, the depositor will get Rs 234.35 after 10 years on maturity of the certificate.

Incidentally, as part of the effort to modernize the post offices, government has been allocating more funds. According to available information 24,015 post offices have been computerized.

Chandigarh, December 9
There has been a surge in fraudulent online lotteries, where people are offered huge sums in foreign remittances. Creating awareness against these online lottery frauds, and updating about the legal remedial measures was the quintessential part of the meet on Foreign Exchange Management Act (FEMA), organized by the RBI here on Friday.

Officials from the apex regulatory bank, RBI, and from the cyber crime cell of the police admitted that the number of cases regarding these online lottery frauds, were rising. In spite of the efforts being made by the RBI and local police, warning people against falling in for these online frauds, a large number of people in the region were falling prey to fraudsters, who have been stealing them of their hard earned money.

It is learnt that in most cases the identity of the unsuspecting victims are first stolen via a virus or worm, or through spyware inserted in the computer from any email or a website. A lot of these scams present themselves as pop up ads or emails, claiming that recipients have won massive amounts of money in an online lottery.

Asking people not to fall prey to this “lure of easy money”, officials of the RBI and the Chandigarh police said they were jointly organizing seminars to caution the public against these frauds. Seeing the rise in such frauds, the police has now appointed nodal officers in most places here to deal with these cases.

Participants at the meet also spoke about the rising inward remittances ad different ways of legal money transfer. 

BRIEFLY

Corporate Briefs

HDFC Bank premium cards: HDFC Bank has launched premium credit cards exclusively for women — ‘Solitaire Premium', with a Rs 5 lakh credit limit, and 'Solitaire', with a credit limit of up to Rs 2 lakh. The bank's premium bouquet of plastics includes 'Infinia' and a pack of travel cards launched in the last 6 months.