New Delhi, February 1
Decontrol of diesel prices, higher excise duty on diesel cars and use of cash transfer system to distribute subsidies directly to the beneficiaries are among the suggestions given by economists for the forthcoming budget for FY12-13.

At the pre-budget meeting with the Finance Minister, Pranab Mukherjee, economists suggested the primary task of this year’s exercise should be to restore a sense of confidence among the investors both domestic and international in India’s growth story.

They asked Mukherjee to make this budget a “policy” one rather than only a statement of accounts. Many economists said the message of fiscal consolidation should also be sent through the budget. They suggested expenditure on populist measures be reduced and the leakages of funds in implementing them be curbed.

Among the economists who attended the meeting included Surjit Bhalla, Nitin Desai, Rajiv Kumar of FICCI, Sudipto Mundle of NIPFP, Bharat Ramaswamy of ISI, Delhi, Ajit Ranade of the Aditya Birla group and M. Govind Rao of NIPFP.

Certain participants suggested mega projects, especially those relating to power, mining and steel, that had been held up for long may be cleared to send a positive signal to the corporate world. The APMC Act may be amended and perishable commodities such as fruits and vegetables be taken out of its purview, they added.

Some economists suggested giving infrastructure status to aviation sector and township housing among others. Some members suggested extension of section 80(i) of the Income Tax Act for at least another three years for attracting investment in infrastructure sector. Certain participants suggested to abolish security transaction tax, reforms in tax administration system, a better tax-GDP ratio and budgetary incentives to tackle environmental problems.

Speaking at the meeting, Mukherjee said in the era of coalition politics, decisions are taken through consensus. “The current year is a challenging one due to the problems of inflation, fiscal deficit and maintenance of sustainable and inclusive growth”, he added.

He said due to volatility of international crude prices, Euro zone crisis and overall slowdown in the growth process in developed economies, the emerging economies including India had also to face adverse impact of global slowdown.

Mukherjee said he hoped headline inflation would be between 6% and 7% by March-end while the growth rate may be around 7% plus.

Mumbai, February 1
The rupee touched its highest level against the US dollar in nearly three months on Wednesday, supported by strong dollar inflows and a recovery in the local stock market.

The rupee reversed intraday losses in afternoon trading helped by portfolio flows and recovery in local shares. At 4:34 p.m. it was at 49.27/28 to the dollar after touching 49.26, a level not seen since Nov 8. It closed at 49.44/45 on Tuesday.

Outlook on the rupee is bullish as foreign investors are expected to park more funds in Asia's third-largest economy, where growth is seen perking up as the central bank gradually returns to an accommodative monetary policy.

Overseas investors have bought Indian shares worth $2.1 billion so far this year and invested $3.2 billion in debt, according to SEBI data. The BSE Sensex too recovered all early losses and was up 0.19%.

The rupee rose about 7.4% in January, its best monthly gain in more than 17 years, propelled by a rebound in foreign fund inflows.

Data showed US home prices fell more steeply than expected in November, while consumers turned less optimistic in January, highlighting the hurdles still facing the US economy.

Asian shares were mixed in cautious trade Wednesday amid weaker-than-expected US economic data, slumping Japanese corporate earnings and ongoing uncertainty over Europe's debt crisis.

Markets were broadly unmoved by official data from China showing manufacturing activity improved slightly in January, while a separate study by HSBC showed a continued contraction, albeit at a slower pace. — Reuters

New Delhi, February 1
The new year has begun on a positive note for the automobile industry in the country with even the country’s largest maker Maruti Suzuki India Ltd which had been on a slide for the past few months, registering higher sales this year in January than last year.

The industry, which has been struggling to improve sales in the backdrop of high interest rates and fuel costs, has been upbeat at the start of the year hoping to shake off the sluggish sales witnessed last year.

This good news of higher sales by almost all automakers came even as Maruti Suzuki said it expected sales to dip by 11% this fiscal due to production losses suffered during the year following repeated incidents of labour unrest at its Manesar plant.

"In the April-December period this fiscal, we were down 16% from the year-ago period. In January, it has narrowed to 14%. For the whole fiscal, we think our sales will be down by 11 per cent from the last fiscal," Maruti Suzuki India managing executive officer (marketing & sales) Mayank Pareek told reporters. "This ongoing fiscal has been a really trying year for us. We had lost about 1,06,000 units, which is almost about a month's production, due to the strikes at the Manesar plant”.

Meanwhile, Mahindra & Mahindra said its January sales zoomed 22% at 44,717 units from 36,718 units sold during the same month of 2011.

Tata Motors too reported good sales numbers for last month, up by 16%. This included exports at 87,465 units over 75,423 sold in the like period of 2011.

Domestic passenger car sales and distribution off-take of Fiat cars too grew by 14% at 36,770 units from 32,386 units in the corresponding period of last year.

The country’s second largest carmaker, Hyundai Motor India Ltd, closed last month with a sales growth of 15.2% at 49,901 units from 43,316 units in the like period of 2011.

Nissan Motor India Pvt Ltd posted a nearly threefold jump in total sales to 5,168 units in January. In the same month last year, the company sold a total of 1,857 units.

Toyota Kirloskar Motor reported a 89.3% rise in sales to 17,395 units in January, driven by robust demand for its latest Etios and Liva models. However, General Motors India posted a 17.46% year-on-year decline in sales to 8,241 units in January, 2012. The company sold 9,984 units in the same month last year.

The disruption in supply of components due to the Thailand floods continued to affect the production at Honda Siel Cars India impacting its sales in January 2012.

The two-wheeler segment was led by Hero MotoCorp, which posted an 11.5%rise in sales for last month at 520,272 units over 466,524 units sold in the same period of the previous year.

Hyderabad, February 1
IT firm Mahindra Satyam on Wednesday reported a whopping four-fold increase in profit after tax to Rs 308 crore for the quarter ended December 31.

The company's consolidated revenue stood at Rs 1,718 crore in the third quarter, 34% higher year-on-year. "We continue on our path of building the organization and improving our operating matrix in the face of some headwinds on the economic front," Mahindra Satyam chairman Vineet Nayyar said in a statement.

The total headcount of the company stood at 32,280 as of December 31, a net addition of 188 employees quarter-on-quarter. The attrition rate at the company was 16% in Q3, down from 25% in the same period last year.

Analysts, on average, had expected a net profit of Rs 2.2 billion. Mahindra Satyam booked foreign exchange gains of Rs 664 million, up from Rs 134 million in the year-earlier period.

"In terms of profitability, I would say that we are reaching normalcy and are at par, or pretty close to being at par, to the industry standards," Nayyar said.

The eurozone sovereign debt crisis is a worry for the sector, which has been looking to increase sales to the region to hedge against excessive exposure to the United States.

The United States accounts for about half of Mahindra Satyam's sales, with Europe accounting for about a quarter.

New Delhi, February 1
A shakeout is likely in the country’s engineering and business schools India on account of declining occupancy levels. Occupancy levels are under pressure as the number of seats on offer has increased significantly and several colleges have not been able to equip students to meet the requirements of corporate India.

Low occupancy has impacted the ability of several lower-rung colleges to sustain operations and, as a result, Crisil Research feels several colleges may shut down or change hands over the next few years.

Despite low penetration of higher education in India and healthy demand for skilled manpower, colleges are struggling to fill seats. As per CRISIL Research estimates, the average occupancy rate declined in 2011-12 to around 67% for engineering colleges and to about 65% for business schools.

The study indicates wide variation in occupancy rates across various states and grades. For example, engineering colleges in Andhra Pradesh and Uttar Pradesh had an average occupancy of around 60% and 40%, respectively, which is much lower than the pan-India average. Tier-4 B-schools, estimated to account for around 36% of the total seats, had an average occupancy of only around 50%.

Occupancy levels are under pressure due to the significant increase in the number of seats across colleges, shortage of skilled faculty, absence of industry link-ups, increasing awareness amongst students about the quality of education imparted by colleges.

According to Ajay Srinivasan, head of industry research, CRISIL Research, “Low occupancy rates are making it difficult for many lower-rung colleges to sustain operations. As a result, we expect a number of colleges to face closure or change in ownership over the next few years.”

The number of seats offered by AICTE-approved B-schools has increased almost fourfold to 352,000 in 2011-12 from 94,000 in 2006-07, while that for engineering colleges has zoomed to 1,485,000 from 550,000 during the same period.

Moreover, there is also a significant concentration of supply, with Andhra, UP, Tamil Nadu, Maharashtra, Karnataka and M.P. together accounting for close to 65% of the engineering seats on offer. Quality of education is another major concern, as an overwhelming percentage of students passing out from lower-rung engineering colleges and B-schools lack skill sets needed to start working, after graduating, without extensive training.

London, February 1
If you were burned by emerging market stocks last year, you might want to give the relationship another chance in 2012. The stocks are doing pretty well so far this year, and analysts point to multiple reasons the gains should continue.

During the first four weeks of the year, Vanguard's MSCI Emerging Markets, the largest emerging market stock index ETF, was up nearly 11.6% — more than double the 5% return for the SPDR S&P 500. The upswing indicates to investing experts that a drop of almost 20% in emerging market stocks last year wasn't a bubble bursting.

"After burning investors last year, we expect the BRIC countries to be among the top-performing markets in 2012," said Ned Davis Research analyst Anthony Welch of the four dominant emerging markets: Brazil, Russia, India and China. "We think this is a good time to add to exposure to those markets."

The stocks and the funds that invest in them are still vulnerable to many of the same shocks that rumbled through the markets in 2011; but analysts say a combination of positive economic trends, comparatively strong growth, and down-to-earth prices make the recent upswing not just a recovery bounce, but an opportunity.

To support his optimistic outlook, Welch, in a January client report, pointed to a demonstrated ability of those countries to manage the delicate balance between controlling inflation and maintaining economic growth. — Reuters