New Delhi, December 7
The Indian economy is likely to cross 9 per cent GDP growth for the year and the robust growth is taking place in a benign macro environment with revenues rising and inflation falling but the key challenges are risks in the global economy, managing capital inflows and climate change, according to the mid-year review released by the Finance Ministry today.

Finance Minister Pranab Mukherjee tabled the mid-year analysis of the economy in Parliament. It says that the economy is continuing to recover robustly in 2010-11, growing at one of the fastest rates in the world and climbing back to near pre-crisis levels. All indicators point to GDP growth crossing 9 per cent for the entire fiscal year 2010-11, although some risks remain in the global economy. In the first half of the year, growth was at 8.9 per cent which has led to a revised projection of 8.75 per cent for the full year.

This growth is also broadbased, with recovery in all three sectors, agriculture, industry and services, and in private consumption and investment. Abundant late rainfall is boosting agriculture, while inflation is falling.

The review, however, is cautions that though growth will be sustained the key challenges are continued fiscal consolidation, managing capital inflows prudently, and dealing with the challenges in infrastructure, education and skills development and climate change.

Inflation, which has been a major concern has started falling and with normal rainfall across the country and a sharp boost in crop yields, first advance estimates suggest that kharif production is now expected to rise by over 10 per cent year-on-year for foodgrains, and even higher for cash crops such as cotton and sugarcane. As a result, food price inflation has now dropped to single digit levels and is headed further downwards.

From a policy of fiscal expansion used during the global economic crisis to sustain growth, the government is now moving to a careful exit of economic stimulus. The review notes that the economic recovery has been driven by strongly expansionary fiscal policy during the crisis but now with a broadbased private sector recovery evident, it is doing a calibrated exit.

During the first half, the revenue and fiscal deficits are now estimated at 27.1 per cent and 34.9 per cent of budget estimates respectively. This is the first time that these ratios have fallen well below the threshold levels of 45 per cent of the budget estimate (BE) as mandated in the FRBM Rules 2004. Non-debt receipts at 55.6 per cent of budget estimates also well above the mid-year benchmark level of 40 per cent.

In addition, non-tax receipts were also significant at Rs 1.64 lakh crore at an unprecedented 180 per cent growth, due to the higher receipts from telecom 3G spectrum and BWA receipts. With the robust disinvestment pipeline in place, the BE estimate of Rs. 40,000 crore would be met.

With the prevailing trends in revenues and expenditures, the target for the fiscal deficit of 5.5 percent of GDP is expected to be met. This is the first time after the implementation of the FRBM Act in 2004 that the outcomes for the first half for deficit targets are well within the prescribed limits.

Mumbai, December 7
French President Nicholas Sarkozy today asked India to open up more sectors of its markets to international players. Addressing business leaders here shortly before returning home, Sarkozy called for India to open up investments in multi-brand retail, banking, insurance and other areas.

"There is a need for reciprocity in trade ties between India and France and our hosts need to open up more sectors of the economy," Sarkozy said in his speech. He went on to say that French companies were looking for opportunities as equal partners with Indians and were not in the country with "bulging pockets".

Sarkozy, who, delivered an extempore speech went on to say that despite problems like unemployment at home, France was opening its economy and inviting foreign investment. He added that Indian businessmen would find good opportunities in petroleum, agricultural products and textiles of the French economy.

Sarkozy went on to warn that India which was demanding a permanent

seat in the United Nations Security Council would have to accept higher responsibilities. "India may have to send troops on missions to maintain peace abroad," Sarkozy said.

"You will have to send troops beyond your borders to defend peace...It is very painful...French lives have been lost.... but that is the price that a big power has to pay," Sarkozy said.

He demanded that the reform in the UNSC come about right away in 2011 and not 2012, he said.

Hyderabad, December 7
The Indian film industry will face a major threat to its survival if double taxation in the form of Goods and Service Tax (GST) and state-specific entertainment tax is imposed, the representatives of the film industry and Federation of Indian Chambers of Commerce and Industry (FICCI) said here.

“The central government has proposed to take entertainment tax out of GST’s purview. In that case, film industry will have to pay multiple taxes as it is already facing problems with VAT, stamp duty and service tax. This multiple-taxation will be a big blow to the industry,” eminent film maker and Chairman, FICCI entertainment committee, Yash Chopra said.

He was speaking at the two-day FICCI meet on the media and entertainment business conclave here to discuss the problems of the entertainment sector.

“The very future of the film industry appears bleak. If the proposed amendments are made into law, it will have a crippling effect. FIICI should take up our cause,” Yash Chopra, who heads Yash Raj Films, said.

The industry has been pitching for inclusion of entertainment tax into the GST regime to create a common tax rate in all states and also reduce the tax burden.

The Indian film industry was the only industry in the world that was being subjected to multiple taxes, said D Suresh Babu, a prominent Telugu film producer and MD of Suresh Productions.

He said multiple taxes would have a debilitating impact on the film industry, which was already facing resource crunch.

Amit Mitra, secretary-general, FICCI, said the industry should read the amendments carefully and understand the difficulties they would pose. He asked Chopra to take up the issue with the centre. Allu Arvind, MD, Geeta Arts, another film production company, said the Andhra Pradesh Government had imposed VAT (valued added tax) on processed film, adding to the industry's tax burden.

Renowned media baron and Chairman of Ramoji Group, Ch Ramoji Rao, said the entertainment tax structure in the country was flawed. “Taxes levied can at best be termed punitive. I fail to understand why our governments mete out step-motherly treatment to the film industry that offers entertainment to millions of people,” Rao said.

The conclave, focusing on the theme “regional is the new national”, is being attended by media and entertainment business companies along with government officials to discuss issues confronting the industry.

Bhiwani, December 7
In its all India agents' meeting held at mill compound of Chinar Suiting Fabrics, plans for ensuing summer season production and to increase the sale were discussed. Asiad bronze medal winner boxer Dinesh also arrived in the mill complex on the occasion and met all the agents.

Former minister Ram Bhajan Agarwal blessed him for his bright future. Agarwal, while presiding over the agents' meeting, said Bhiwani boxers had brought the name on the world map and hoped these boxers would give a magnificent presentation during the next Olympics to be held in London. He said Chinar Fabrics was known for its better quality and economical rates and its product was in grips of the customer. He disclosed that Chinar Fabrics would soon launch its new range of fabrics on national level.

Managing Director PD Agarwal said such meetings gave new ideas of latest fasion designing. “We can know which design was being sold largely in a particular state through these meetings and so we give shape accordingly to the production process," said Agarwal.

Marketing president, Meenu Agarwal said Chinar Fabrics had launched a new product range according to the latest fashion trend in the market, besides increasing sale. "We have recently launched company's attractive logo," said Meenu Agarwal.

New Delhi, December 7
State-owned Punjab National Bank today joined the ranks of domestic lenders like ICICI Bank by hiking deposit and lending rates by up to 100 basis points.

The move by the second largest public sector lender will make loans more expensive for existing customers, while offering higher returns on fixed deposits at the same time.

The bank has decided to revise the rate of interest on single domestic term deposits by 50 basis points to 100 basis points in selected buckets effective December 8, PNB said in a statement.

With this revision, the peak rate for retail deposits of up to Rs 10 crore stands at 8.50 per cent, it said.

To partly offset the impact of the increase in cost of deposits, the bank has also raised its benchmark lending rate by 75 basis points to 12.5 per cent from 11.75 per cent previously, it said.

Interest on term deposits (up to Rs one crore) of 15-45 days' maturity will now fetch PNB customers 4 per cent interest, compared to 3 per cent at present, an increase of 100 basis points.

At the same time, the interest on fixed deposits with 5-8 years' tenor has been increased by 75 basis points to 8.5 per cent from the existing 7.75 per cent, it said.

For fixed deposits with a tenor between 180-270 days, the new interest rate will be 7 per cent, as against the existing rate of 6.25 per cent. Fixed deposits with a tenor of 271 days to one year will attract 7.5 per cent interest, an increase of 100 basis points vis-a-vis the previous rate. — PTI

Mumbai, December 7
To boost the National Pension System (NPS) through easy access, brokerage firm ICICI Securities has launched the NPS facility on its portal.

"The online availability of NPA will give a big boost to pension product," Pension Fund Regulatory and Development Authority (PFRDA) Chairman Yogesh Agarwal said. — PTI