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Economic Survey 2012-13
Infrastructure
Etihad buys Jet Air’s London slots as deal talks continue
Industry, farmers in region pin hopes on FM to stem slowdown
Gold demand up on duty hike fears
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Haryana, Himachal best on financial inclusion
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Economic Survey 2012-13
Infrastructure FDI inflows in telecom sector slid 96% to $70.46 m April-Nov 2012 Tribune News Service
The survey pointed out that that as a result of severe equity crunch, the government would be coming out with a new initiative promoting highway development. On the other hand FDI inflows in the telecom sector plummeted 96 per cent to US $70.46 million in April to November 2012 period against the FDI of $1,987.18 million in the same period a year ago. The Economic survey said that "To overcome the economic slowdown in this sector, the road transport and highways ministry has finalized a proposal for awarding projects under new modified turnkey engineering procurement & construction (EPC) mode under 100% government funding in cases where there are no takers under BOT (toll) mode". This mode of delivery will also take care of cost and time overruns.
Of late, financing of road projects has run into difficulty as leveraged companies implementing road projects are unable to raise more debt in the absence of fresh equity amid major players such as GMR and GVK recently announcing exiting from some schemes. The survey said that the cumulative FDI in the sector from April 2000 to November 2012 period stood at $12.62 billion. The sector also saw a decline in bank credit throughout fiscal 2011-12 from 17.77% to 15.21%, the survey said.
The survey said telecom connections rose from 429.72 million in 2008-09 to 895.51 million till Dec 31, 2012. Indian Railways also performed well by carrying 969.78 million tonnes of freight traffic carried in 2011-12 as compared to 833.31 million tonnes in 2008-09.
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Etihad buys Jet Air’s London slots as deal talks continue
As the news of the deal hit the stock markets, shares of Jet Airways as much as 19.7% to close at Rs 534.85 on the Bombay Stock Exchange. Shares of smaller rival SpiceJet also surged 8.5% to Rs 37.55. The move signals positive developments in the discussions and investors cheered the move after a delayed announcement of the potential deal significantly hurt Jet's shares in recent weeks. Reports said Jet will give four board seats to Etihad and both airlines are renegotiating the price for the stake share. Etihad is said to be looking to pick up a 24% stake in Jet Airways, promoted by Naresh Goyal. The total value of the deal is speculated at around $400 million Etihad said the deal to buy slots was a part of a "sale and lease-back" agreement, and Jet would continue to operate flights to London using those slots. A Jet-Etihad deal would be the first since India relaxed ownership rules in September and allowed foreign carriers to buy up to 49% in local carriers, which are battling stiff competition and high operating costs. Malaysia's AirAsia Bhd, Asia's largest budget carrier, also plans to launch a regional airline in India in a venture with the Tata group, marking a return to aviation for India's biggest business house. Etihad, launched in 2003, is on a buying spree to compete with regional rivals Emirates and Qatar Airways. Etihad carrier has taken stakes in Virgin Australia and Aer Lingus and raised its shareholding in Air Berlin and Air Seychelles. Top executives from Etihad and Jet met Indian ministers earlier this month, but the deal faced a setback later when the Gulf carrier's chairman told Reuters the deal needed to be revised. |
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Industry, farmers in region pin hopes on FM to stem slowdown
Chandigarh, February 27 The 2012-13 Economic Survey 2013 released Wednesday has given indications the economy is likely to pick up pace in the next financial year, and the current slowdown is expected to ebb away. Industrialists, farmers and commoners in the region are all hoping the finance minister will come up with definite policies to reinforce faith in the Indian growth story; tame the rising retail inflation; and, bring down the high current account deficit. Gunbir Singh, a member of the CII National Council on Public Policy, said his only expectation from the budget was it should revive the growth trajectory of the Indian economy. “The growth is estimated to hit a low of 5% this fiscal. We hope the finance minister comes up with such policy decisions that spur growth and helps kickstart the Indian growth story once again,” he said, adding he was hoping for some relief for the common man by raising the bar on income tax exemptions and respite in taxes on daily use commodities. Hardial Singh Cheema, managing director of Cheema Spintex, an integrated textile firm, said he was hoping no new taxes would be imposed on the industry, and instead give industry a level playing field, with its competitors. “Already the hike in rail freight charges have been hiked, which will affect the profit margins of the industry located in states like Punjab and Haryana, which are far away from the ports. We hope there are no new taxes imposed on the textile sector and the grants for technical upgrade under the Technology Upgradation Fund Scheme (TUFS) are released regularly to industry,” Cheema said. V.K. Kapoor, secretary of the Haryana State Farmers Kisan Club, said the government should think of introducing a long term agriculture policy, and not look at small political gains while deciding on the budgetary allocations for agriculture. “There should be no debt waiver or debt relief scheme for the farmers as it creates bad credit culture. Instead, the budget should bring provisions to incentivize those farmers who repay their debts on time. We are also hoping that the government does not hit the farming community by de subsidizing urea, as it will raise the input costs of farming manifold,” Kapoor said. Ashok Sethi, director of the Punjab Rice Exporters Association, said though it seemed the rollout of the Goods & Services regime had been stalled for now, the government should launch it as soon as possible as it would remove anomalies in the lopsided state taxation structure on agriculture produce, which he averred was creating problems for the agro processing industry. |
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Gold demand up on duty hike fears
The government has already targeted gold, second only to oil in value of imports, by raising the duty to 6% from 4% on January 21. A government report on Wednesday recommended reining in gold imports to curb external deficit. "Jewellers and traders are a bit worried about the government policy. They are buying on expectations of some moves to curb gold imports in the budget. There might be a higher duty or quantities restriction on imports," said a dealer with a bank. — Reuters |
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India lost 10% share in global BPO market in 5 yrs
New Delhi, February 27 The pre-budget 2012-13 Economic Survey, which was tabled in Parliament on Wednesday, said India faces stiff competition from several emerging countries in the BPO sector. It called for information campaigns by the industry to dispel the myths and fears about outsourcing in the developed economies. Countries like Malaysia, China and the Philippines in Asia; Egypt and Morocco in North Africa; Brazil, Mexico, Chile and Columbia in Latin America; and Poland and Ireland in Europe are emerging as attractive destinations for voice contracts, posing a significant threat to Indian firms, it said. "According to Nasscom, in the last five years, India has lost about 10 per cent market share to the rest of the world in the world BPO space, most of which is in the voice contract segment," it said. According to industry lobby group Nasscom, in FY 2012-13 IT services will account for $50 billion, while Business Process Management (BPM or BPO) and Engineering services would contribute $20 billion and $10 billion, respectively. In terms of competition, though China faces challenges like language proficiency, it is making large investments in the mission mode to increase English proficiency. "Thus, (China) may eventually emerge as a threat to India," it added. The Philippines, which is the second largest destination for outsourcing, is also a serious competitor having developed both the hardware and software segments of IT. Outsourcing has become a national issue in many developed countries like the United States and the United Kingdom, who are supporting the local BPO industry through various means. "In such a situation, the Indian BPO industry needs to gear up to address the challenges. Information campaigns to dispel the myths and fears about outsourcing needs to be undertaken by the industry in the developed economies," it said. In the overall IT and IT-enabled services space, new competitors like China, Israel and the Philippines have emerged in recent years. Between 2005 and 2011, the annual average growth of IT-ITeS services was 69% in the Philippines, 28% in Sri Lanka, 59% in Ukraine, 27% in Russia, 37% in Argentina and 35% in Costa Rica. "Even if in some cases the export values are relatively low, the average annual growth of computer services in these economies is well above the average of the top exporters," it said. — PTI |
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Haryana, Himachal best on financial inclusion
New Delhi, February 27 The survey has batted for state funding on the basis of their human development performance rather than the current criterion of fiscal capacity distance alone. Under the 13th Finance Commission, funds were devolved to states in a way that all had the fiscal capacity to provide the same level of public services to their people at comparable levels of taxation. But such devolution is not yielding the desired results. Interstate comparison of performance shows while some states have performed exceptionally well in terms of growth indicators, they have done poorly on indicators such as poverty, education, health and financial inclusion. Bihar has emerged the best performer on growth in FY12, posting a 16.71% growth, followed by Madhya Pradesh (11.98%) and Maharashtra (8.54%), as against the national average of 6.48%. Punjab on the other hand is the second worst performer on this count with a 5.68% growth rate after Rajasthan (5.41%) |
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New Delhi, February 27
The ministry has pinned its hopes on the EPC mode for road projects as it has been able to award just around 1,000 km of projects, as against the target of 9,500 km for this fiscal ending next month. Under the EPC model, the government will spend the entire money required to build roads so as to attract builders.
The survey, however, also said the telecom sector was among leading sectors along with tourism and railways that have registered more growth compared to other sectors. The survey said telecom connections (wire and wireless) rose from 42.97 million in 2008-09 to 95.13 million in 2011-12. "The data till Dec 31, 2012 shows 89.55 million connections have been provided," it said.
Mumbai/Dubai, February 27
Mumbai, February 27