New Delhi, January 4
India's economy will likely grow faster next fiscal year than in 2011-12 because of an improved external environment and a shift in policy focus from containing inflation to promoting growth, Chief Economic Adviser Kaushik Basu said Wednesday. However, he told Reuters in an interview that public finances were expected to remain under pressure in 2012-13.

Although the official forecast for FY13 is still to be released, some private economists now expect the annual economic growth to be below 7%, lower than 7-7.5% widely expected for the current fiscal.

"I’d forecast next year to be better than the present one," Basu said, predicting close to 7.5% growth in 2011-12, a pickup the following year and a return to the economy's "full-steam" growth of around 9% by 2013-14.

In December, the government slashed its growth forecast for the current fiscal year to about 7.5% from 9% amid slowing domestic and global demand.

"The US is on a slow rise. Europe is still on the brink, but if you ask me to bet I would say, on balance, it would escape falling into another recession," Basu said. "If these expectations are right, then I think India has enough fundamental strength that we will get out of the current slowdown and begin to move."

A combination of policy paralysis in the wake of a slew of corruption scandals, high inflation, high interest rates and an uncertain global environment has hurt Asia's third-largest economy, which had averaged annual economic growth of nearly 10% before the financial crisis of 2008.

GDP growth slowed to 6.9% in the quarter to end-September, its weakest pace in more than two years, and industrial output contracted in October for the first time in more than two years.

Basu said weak industrial activity could pull down growth in the October-December quarter to below 6.9%, but there would be a recovery in the final three months of 2011-12.

"My belief is we have done pretty poorly in the third quarter. In the fourth quarter (January-March), I expect a bounce back, though a moderate one. Growth should exceed 7.5%," he said.

A slowing economy has hit government's tax revenue receipts, sparking concerns that the federal fiscal deficit could miss the budgeted target of 4.6% of GDP by almost one percentage point in the current fiscal year.

"I don't think it’s going to be a very big miss the way some people in the market are speculating. We’re keen to keep it as close as possible to the target," Basu said.

The cash-strapped government said last week it would borrow an additional 400 billion rupees through bonds in 2011/12. — Reuters

Mumbai, January 4
The BSE Sensex fell 0.4 percent on Wednesday, snapping a two-day rally, with investors wary ahead of quarterly corporate results that will begin next week amid slowing economic growth and high interest rates.

A series of rate rises since early 2010 to combat inflation, a weak rupee and sluggish consumer spending are likely to weigh on the results of many companies, while concerns remain about the impact of the euro zone debt crisis on the global economy.

Hindustan Unilever Ltd's shares were among the biggest losers and closed 3.1 percent lower at 395.45 rupees, its lowest closing level in nearly three weeks.

The main 30-share BSE index ended down 0.36% or 56.72 points at 15,882.64, with 18 of its components in the red.

"We’ll see a sustained rally in the market only when the key structural issues like inflation and growth are addressed otherwise the pessimism will continue to be there," said Anshu Kapoor, head of private wealth at Edelweiss Wealth Management. "The earnings season is certainly going to be a negative drag on the markets in the near term due to issues like weak currency, higher input costs and the European debt crisis,"

Bank of America Merrill Lynch said in a note it expected Indian shares to head lower in first half of this year due to slowing growth, worsening domestic macro fundamentals, deteriorating earning profile and a sluggish global economy. — Reuters

New Delhi, January 4
An empowered group of ministers (eGoM) is expected to meet next week to decide on more sugar export during the marketing year ending September 2012.

According to sources, Finance Minister Pranab Mukherjee-led group may meet sometime next week to take a call on this major demand of the industry to allow additional exports of at least one million tonnes to enable domestic mills to take advantage of lower than anticipated output in top supplier Brazil and reduce the liquidity crunch in the sector.

The eGoM had last November approved sugar exports of one million tonnes under the open general licence scheme in the current marketing season. Basing its arguments on availability of surplus stocks, the industry has been clamouring for more, at least 3 mt.

According to the Indian Sugar Mills Association (ISMA), the sugar industry produced 75.78 lakh tonnes up to December 31, 2011 in the current sugar season, which is around 1.1 million tonnes more than the sugar production up to December 31, 2011 of 64.58 lakh tonnes

The sugar industry will be conducting its second satellite mapping on sugarcane harvesting for the 2011-12 sugar season in the beginning of February to firm up and update the industry’s estimate of 26 million tonnes of sugar production of the 2011-12 season.

According to ISMA, the estimated sugar cane crush during the next sugar season 2011-12 will be around 264.5 million tonnes, which translates into 26 million tonnes of sugar. The total availability of sugar, however, works out to 31.8 mt. The domestic consumption is around 22 mt, therefore, the industry association says, the mills will be left with 9.8 mt of surplus sugar

India, the world’s largest sugar producer after Brazil, allowed exports of 1.5 million tonnes under the open general licence scheme in 2010-11 after a gap of two years when it faced a shortage. Industry experts, however, argue that sugar mills lost out on a chance to maximize export returns by cashing in on soaring global prices in February and March last year due to the late decision.

New Delhi, January 4
There were a slew of launches lined up a day before the 11th edition of the Auto Expo gets under way here with Daimler India Commercial Vehicles announcing on Wednesday the launch of its new range of trucks under the BharatBenz brand, Hero Group firm Hero MotoCorp unveiling three new models of motorcycles and Ford India having a global launch of its new compact sports utility vehicle, the EcoSport.

Ford also said that it will invest $142 million (about Rs 750 crore) in the company's Chennai plant

Daimler India Commercial Vehicles, while unveiling the new range of trucks, said that they would be available in the country from third quarter of this calender year, and also plans to start exporting them by year-end. The firm, which is a 100 per cent subsidiary of Germany's Daimler AG, is also considering manufacturing buses in India.

"The full range of the new BharatBenz trucks will be unveiled in March and production (at the plant near Chennai) starts in April. The market launch will be in the third quarter of the current year," Daimler India Commercial Vehicles MD & CEO Marc Llistosella told reporters. In February 2011, the company had unveiled the new BharatBenz brand specially designed for India. The firm has set up a 400-acre production plant at Oragadam near Chennai and is investing Rs 4,400 crore in manufacturing, R&D, marketing/sales and setting up a dealership network.

The company has not yet disclosed its pricing strategy for the new trucks yet, but said it plans to launch 17-19 new products in the next 18 months in 6 to 49 tonne range. The plant would start with an initial capacity of 36,000 units and is likely to be expanded to produce 72,000 units a year starting 2013, which could entail an additional investment of around Rs 350 crore

Breaking away from Honda has not put the brakes on the the BM Munjal-led Hero Group as its Hero MotoCorp unveiled three new models that will hit the Indian market over the next few months.

The company which has already launched the first Hero branded bike in the market last year unveiled two new bikes — the 100cc bike Passion XPro and a 125cc bike Ignitor along with a 110 cc scooter, the Maestro.

However, the company has not announced the price of the three models and will be announced at the time market launch. In August last year, India's largest two-wheeler maker Hero MotoCorp (formerly Hero Honda) had ended its 27 years long relationship with Honda.

Commenting on the new models, Hero MotoCorp senior vice president (marketing & sales) Anil Dua said the Maestro would be targeted at male customers in the age group of 18 to 24 while the Ignitor and XPro will be looking at executives and college going students.

In another launch, Ford Motor Co on Wednesday launched the EcoSport and said it would invest $142 million (about Rs 750 crore) in the company's Chennai plant in south India to manufacture the model for the domestic and export markets

The EcoSport is the second of eight new global models that Ford plans to launch in India, the company said in a statement, as it targets Asian and African markets in a push to increase annual global sales to 8 million vehicles by 2015. Ford, which sold just under 100,000 cars in India in 2011, a rise of 15% from the previous year, has said it expected Asian sales volumes to double to account for a third of the carmaker's global sales by 2020.

Ford will invest $142 million in its 200,000 vehicles-a-year plant in Chennai, where the global auto major builds its Figo and Fiesta models, to buy equipment required to manufacture the EcoSport, according to Ford India managing director Michael Boneham.

New Delhi, January 4
In a major cost-cutting exercise, private sector air-carrier Kingfisher Airlines is believed to be considering about 2,000 job cuts and longer working hours for its staff, among various options.

While e-mailed queries sent to Kingfisher in this regard remained unanswered, industry sources said the debt-ridden carrier could also abstain from any major hiring activities at least till August 2012.

Sources said the carrier is looking at about 2,000 job reductions by July and the exercise could affect various positions at mid-manager level in its corporate offices and also at cabin crew and attendant levels, among others.

At the same time, the airline, a part of Vijay Mallya-led UB group, could also consider increasing the working hours of staff being retained.

It would pay higher incentives and allowances to the staff working longer hours, but the move could still help it cut employee expenses drastically as costs could be double for hiring fresh employees, sources said.

However, the exact financial implications of these proposed initiatives could not be ascertained immediately. The airline is already said to be witnessing some attrition and recently it was reported that some of its air hostesses have left to join state-run Air India. — PTI