The Tribune, Chandigarh, India

Housing finance leader HDFC too raised its floating interest 25 basis points for both existing and new customers

New Delhi, February 1
Seven lenders, including Bank of Baroda (BoB) and HDFC, today raised interest rates by up to 50 basis points, in response to the Reserve Bank's tight monetary policy announced last week.

While BoB and Oriental Bank of Commerce (OBC) raised the deposit rates, HDFC, Indian Bank, Indian Overseas Bank (IOB), Bank of India (BoI) and Dena Bank hiked their lending rates.

BoB raised it deposit rates by 50 basis points (bps) to 9.10 per cent for 444 days deposits till March 2011 and for deposit of 1 year and up to 443 days to 8.75 per cent, with effect from tomorrow. OBC has decided to raise the fixed deposit rates by 25 basis points for deposits of varying maturities. It will pay the highest rate of 9.25 per cent for 500-day deposits.

Housing finance leader HDFC too raised its floating interest by 25 basis points with effect from today for both existing and new customers.

HDFC has increased its retail prime lending rate, on which its adjustable rate home loans is benchmarked by 25 basis points.

“This is in line with the interest rates in the economy, which have hardened due to an increase in policy rates, inflation and liquidity in the domestic market,” HDFC said.

Indian Bank has announced an increase in base lending rates by 50 basis points to 9.5 per cent with effect from today.

Besides, IOB has also raised its base rate from 9 per cent to 9.5 per cent with effect from today.

BoI raised its base rate and BPLR by 50 bps each to 9.5 per cent and 13.75 per cent, respectively with effect from February 3. Dena Bank raised its minimum lending rate or (the Base Rate) by 0.50 per cent to 9.45 per cent with effect from February 2.

While the higher deposit rates would provide better returns to savers, rise in base rates would increase the EMIs for auto and home loan borrowers. Besides, corporate loans too would become expensive.

Banks have been raising interest rates following a 25 basis point hike in short-term lending (repo) and borrowing (reverse repo) rates announced by the Reserve Bank in its third quarterly review of monetary policy last week.

The announcement of hiking deposit and lending rates follows similar announcements made by Punjab National Bank, Allahabad Bank and Punjab & Sind Bank yesterday. — PTI

Govt may hike tax exemption limit

New Delhi, February 1
Tax payers can expect some relief from high inflation in Budget 2011-12 as the government may raise the income tax exemption limit for individuals.“Finance Minister Pranab Mukherjee is alive to the price situation and its impact on the common man,” sources said, adding he would favourably consider the issue of hiking tax exemption limit.

Moreover, they said, as the government is committed to raise the income tax exemption limit from Rs 1.6 lakh per annum to Rs 2 lakh in line with the Direct Taxes Code (DTC) in 2012-13, tax payers could expect at least some relief in the upcoming Budget on February 28.

“The finance ministry would keep in mind the high inflation in the Budget. Since there is no dearness allowance for a vast section of the society, hike in income tax exemption limit is likely," a source told PTI.

However, under the the DTC Bill which was introduced in Parliament last year, the I-T exemption limit is of 2 lakh.

In the DTC bill, the government seeks to widen tax slabs to levy 10 per cent rate on income between Rs 2 lakh and Rs 5 lakh, 20 per cent on Rs 5-10 lakh and 30 per cent above Rs 10 lakh.

The DTC, which would replace the Income Tax Act, is slated to come into effect from April next year.

"Since inflation is eating into the income of the people, some of DTC provisions can be implemented to benefit the common man," the official added.

Inflation, particularly the food inflation, has been a concern for both the government and the common man. For past few months, food prices have been staying at very high levels.

The wholesale price food inflation rose to 15.57 per cent for the period ended January 15, on escalating vegetable prices, particularly, onions. It was at 15.52 per cent for the week ended January 8.

The overall inflation in December last year had also gone up to 8.43 per cent, up from 7.48 per cent in the previous month, mainly driven by costly food items.

Recently, P Chidambaram who served as Finance Minister before moving to the Home Ministry in the previous UPA regime, said that there is no tax worse than inflation. — PTI

Auto sales moderate in January

Maruti Suzuki India and Tata Motors reported growth of less than 20%, while Hyundai sales declined.

Mumbai, February 1
Auto sales in January this year moderated after high numbers last year with leading carmakers, including Maruti Suzuki India, Tata Motors reporting sales growth rate in mid-teens, while that of Hyundai declined.

The country’s largest carmaker Maruti Suzuki India reported a 14.73 per cent jump in sales during January, 2011, to 1,09,743 units. Tata Motors said its January sales grew 15 per cent at 75,423 units from the same month last year.

On the other hand, Hyundai Motor India Ltd (HMIL) reported a 17.7 per cent decline in January sales at 43,316 units, compared to 52,628 units in the same month last year. The moderated numbers by the big three of the Indian auto industy are in contrast to around 30 per cent growth that the sector witnessed in 2010.

Society of Indian Automobile Manufacturers (SIAM) President Pawan Goenka said the high growth rate of 30 per cent was unsustainable considering the changing economic environment.

“The impact of RBI’s recent hike in key rates will be felt and commodity prices continue to be a concern,” Goenka said, adding the sales growth expectation for the next fiscal is around 15-18 per cent. MSIs’ sales in the domestic market stood at 1,00,422 units in January, 2011, a 23.84 per cent increase from 81,087 units in the year-ago period.

On the other hand, Tata Motors’ total passenger vehicles sales in India during January 2011 stood at 30,212 units, 15 per cent from the same month last year.

HMIL’s domestic sales during January this year saw growth of 2.4 per cent at 30,306 units. Marginal player, Ford India reported its best ever monthly sales with an over four-fold increase in its January sales at 10,026 units as compared to the same month last year. Honda Siel Cars India said it sold 6,358 units during the month registering a jump 6.3 per cent.

Two-wheeler makers also posted numbers that mirrored those of the cars segment. The country’s largest two-wheeler maker Hero Honda today reported sales of 4,66,524 units for January, 2011 registering a jump of 19.68 per cent over the same month last year. India’s biggest scooter maker Honda Motorcycle & Scooter India (HMSI) posted an 8.89 per cent increase in overall sales at 1,29,110 units in January 2011. Chennai-based TVS Motor Co, however, reported 29 per cent in January, 2011, to 161,725 units during the month. — PTI

Dec exports at $22.5 bn; highest in 33 months

New Delhi, February 1
India’s exports rose 36.4 per cent to $22.5 billion in December 2010 on an annual basis, the highest in 33 months, on back of increased demand in the US and EU, raising hopes of exceeding this fiscal’s target of $200 billion.

The country's merchandise exports in December 2009 had stood at $16.4 billion. However, imports during the month contracted by 11.1 per cent to $25.13 billion over the same period last year, resulting in narrowing of trade deficit by $2.6 billion, Commerce Ministry data released today said.

During April-December period of the current fiscal, the outbound shipment grew by 29.5 per cent to $164.7 billion from $127.1 billion year-on-year.

“The US and EU markets have been doing pretty good,” Commerce Secretary Rahul Khullar had said recently.

In its monetary policy review, the RBI had said global growth prospects have improved in recent weeks. The recovery in major advanced economies which had weakened during second quarter of 2010, regained strength in the following quarter. Corporate capital spending and retail sales in the US are showing improvement. The US and EU are India’s traditional markets and account for more than one third of its shipments.

The "remarkable job by exports" was also attributed to diversification of India's export markets.

For instance, 112 per cent rise in engineering exports was helped to a great extent by orders from Latin American countries like Columbia, a commerce department official said.

The trade deficit during April-December stood at USD 82 billion, marginally higher than $80.13 billion in the corresponding period last fiscal.

The government had set an export target of USD 200 billion for 2010-11.
However, both the Government and exporters expect the shipments to be in the range of $215-225 billion.

"It is quite clear that the Indian exports are on a rebound and a new record will be set this year," said Rakesh Mohan Joshi of Indian Institute of Foreign Trade (IIFT).

In December, the sectors which registered higher growth, include engineering (112 per cent), electronics (88 per cent), man made fibres (30 per cent) and yarns (65 per cent). FIEO, the apex exporters body, said its forecast that the country is on course to exceed the export target, is coming true.

"In fact, as per the current trade data, exports may top the robust expectations," FIEO President S Deora said. — PTI

Italy to simplify visa procedure for Indians

Rome, February 1
Italy today assured India that it will take steps to simplify the visa procedures for Indian professionals and students.Commerce Minister Anand Sharma met Italian Foreign Minister Franco Frattini here and raised the issue of simplification of visa procedures for (Indian) business leaders and professionals, an official statement said.

“In a significant development, the Foreign Minister of Italy assured Sharma that major simplification will be made in the visa regime for business, students and researchers and official/ diplomatic passport holders,” it said.

Frattini said, "In the new Schengen visa regime, flexibilities provided for the national visa regime will be explored fully to see for long-term multiple entry visas for up to 3 years for these categories". — PTI