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Jan IIP at 6.8% versus 2.5% in Dec, fastest growth in 7 months
Punjab should upgrade urban infrastructure: CII
RBI likely to hold interest rates steady
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Politics, slower growth hobble reform
Exporters for tax holidays, freight sops
Diesel pricing: Auto majors put
Rs 3k crore investments on hold
Azim Premji Trust to sell 35 mn Wipro shares
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Jan IIP at 6.8% versus 2.5% in Dec, fastest growth in 7 months
New Delhi, March 12 A research note by HSBC said the massive growth jump for nondurables went well beyond what could reasonably be expected and was driven by food production. While this number was encouraging, the wild swings in consumer durables and non-durables suggest the number should be interpreted with some caution. A report by Standard Chartered said the headline number was a surprise , however the bigger surprise was the driver of this strong number. Consumer non durables ( has a weight of 21% in the overall IIP) grew at astonishing rate of 42% year-on-year. Since the IIP series began in 2004-05 , this is the highest growth ever recorded by the subindex of consumer nondurables. Last time such growth rates were seen back in the boom years when consumer nondurables grew at 34% in April 2007. The report said such a strong pickup in consumption activity is difficult to understand and explain. The state assembly polls could be one possible reason for higher production of such items but there have been several elections (both state and general) in the past too. A low base effect can be yet another possible explanation — food and beverages grew by just 0.7% in January. Excluding food and beverages, the IIP growth was much weaker at (-)0.4% year-on-year and has left the market unenthused, the report added. |
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Punjab should upgrade urban infrastructure: CII
Chandigarh, March 12 These were the views expressed by CII (northern region) Vijay Thandani on the sidelines of the chamber’s annual session for Punjab and Chandigarh, held here on Monday. “This region has tremendous factor advantages and there’s a great opportunity to leverage them in the future. Technology enablement of agriculture, infrastructure development for industrialization and better human infrastructure for the services sector have emerged as major priorities”, he said. |
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BUDGET 2012
Mumbai, March 12 The RBI will leave its key repo rate unchanged at 8.50 per cent, 17 of 20 analysts polled by Reuters said. In a January poll, 8 of 22 respondents had forecast a cut by the end of March. A recent rally in global oil prices that threatens to derail slowing inflation is also expected to prompt the central bank to leave interest rates on hold for another month at least. Analysts said the RBI was unlikely to make a move on interest rates or cut the cash reserve ratio further before the government sets its borrowing plan for the next fiscal year starting in April in the budget to be released on Friday. The RBI cut the CRR, the share of deposits that banks must hold with it, by 75 basis points to 4.75% on Friday after the close of local markets, a move that surprised for its timing and its sharpness. Only one respondent expects another 25 basis point cut in the CRR on Thursday, while the rest expect it to be held steady. "Expansionary fiscal policy by the government will constrain the RBI from cutting policy interest rates," said Sailesh K. Jha, head of Asia Strategy at SEB in Singapore. "It’ll also limit the scope for further significant CRR cuts beyond the 25-50 basis points we’re forecasting in the first half of 2012." The government is expected to say it plans to borrow Rs 5.3 trillion ($106 billion) in the new fiscal year, up from a scheduled Rs 5.1 trillion in the current year, when it releases its budget on March 16, according to a Reuters poll. Out of 14 respondents, 12 expect the RBI to reduce its key interest rate by 50 basis points to 8% by June-end, while two analysts expect a slower 25 basis point cut. The first repo rate cut will be on April 17, when the central bank announces its annual monetary policy, said Rajeev Malik, an economist with CLSA in Singapore. However, he expects the recent rise in oil prices to limit the room for RBI to cut interest rates.— Reuters
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Politics, slower growth hobble reform
Mumbai/New Delhi, March 12 What it can do is bolster tax collections by rolling back what remains of Lehman crisis-era stimulus and restoring excise taxes to earlier levels. It can also expand the scope of service tax coverage and keep a lid on populist spending, no small feat for a government whose base tends to be rural and poor. Grappling with a yawning fiscal deficit will be crucial to restoring credibility that was stretched in the last budget by unrealistic assumptions. "Big steps won’t be taken, but baby steps will be taken. They’ll try to show they are trying to do things," M. Govinda Rao, a member of the PM's Economic Advisory Council, told Reuters. The central bank, investors and rating agencies are all clamouring for cuts to a deficit that forces heavy government borrowing, driving up interest costs and deterring investment. Including shortfalls at the state level, fiscal deficit is around 8% of GDP, the highest in emerging Asia. Economists expect Finance Minister Pranab Mukherjee to target a fiscal deficit at the federal level of about 4.8 to 5.3% of GDP for the fiscal year that starts next month, higher than last year's 4.6% target but less than the roughly 6% it is actually on track to chalk up. — Reuters |
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Exporters for tax holidays, freight sops
Chandigarh, March 12 With hopes that the government will come to their rescue by incentivizing exporters for earning the foreign currency, the main things on the wish list of exporters from this region are an extension in the focus market scheme; reducing cost of funds being made available to them; besides rail freight concessions and reduction in customs duty on raw material, so as to reduce their input costs. A.K. Kohli, senior vice president of the Punjab Chamber of Small Exporters, told The Tribune he hoped the government would re-introduce a freight equalization policy, as existed in the early 90’s. “By giving freight concession of 15%, the freight charges levied on all exporters are same- irrespective of the state where an exporter is manufacturing his goods. The growth in exports has fallen to a dismal 4.3%, and could actually be flat by the end of the financial year. In order to maintain the momentum of growth, the government should roll back its proposal to hike rail freight charges. The corporate tax should be reduced from 30% to 25%; and the scheme of providing interest subvention of two per cent to exporters should be extended further, beyond the deadline of March 31, 2012,” he said. Seconding him, Ram N. Gupta, a textile exporter from Panipat, said the government should also start with income tax exemption under Section 80 HHC, as is being given to the 100 per cent export oriented units. “This will ensure exporters (who also operate in the domestic market) get a level playing field with the EOUs. Since Panipat is the hub of handloom and textile exports, with Rs 3,000 crore worth of exports from here annually, we also hope that the internal container depot in Panipat is upgraded,” he said. S.C. Ralhan, an auto parts exporter from Ludhiana, said: “The way ahead for giving a push to exports would be to strengthen the manufacturing sector engaged in exports. This could be done by raising depreciation on machinery from 15% to 25%, as it would help exporters to upgrade plant technology.” |
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Diesel pricing: Auto majors put
Rs 3k crore investments on hold
New Delhi, March 12
The Society of Indian Automobile Manufacturers (SIAM) said Monday while there seemed to be some kind of a recovery in the auto sector, especially cars, the confusion over diesel pricing has resulted in automakers, including the country’s largest car manufacturers — Maruti Suzuki India and Hyundai Motors India — holding up investments of over Rs 3,000 crore in India. Talking to reporters here, SIAM director general Vishnu Mathur, while releasing the monthly sales figures for the industry for February, said: "Many of our members are still unclear whether they should invest on diesel technology in India as there’s no clarity on how the fuel will be priced in the future. This has resulted in over Rs 3,000 crore investments being held back". Not going into specifics, he said the firms that had held back investments included Maruti Suzuki, Hyundai, Ford India, Tata Motors and General Motors India. All of these companies have been looking to put up new diesel engine manufacturing plants specially, in the wake of a major spurt in the sales of the diesel cars. At present petrol prices are deregulated but diesel prices are still decided by the government, which provides subsidy on the fuel.
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Azim Premji Trust to sell 35 mn Wipro shares Bangalore, March 12 "The Azim Premji Foundation is continuing to rapidly scale up its activities. The endowment supporting the foundation is held by the Azim Premji Trust. In order to support the continuing scale up of the foundation, the Azim Premji Trust today informed the stock exchanges that it proposes to sell up to 35 million shares of Wipro Limited held by it following the Offer For Sale process prescribed by SEBI," a statement issued here today by Wipro said. Wipro has decided to follow the auction route to sell the shares valued around Rs 1,530 crore.
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According to Crisil Research, this is the highest IIP growth witnessed in the last seven months and is a bit surprising as the main thrust to industrial output growth in January 2012 came from consumer nondurable sector which grew at 42%. “As industrial output has followed a highly volatile growth trajectory so far this fiscal, it has become extremely difficult to draw any meaningful conclusions about the strength of industrial activity”, Crisil said. Moreover, this high growth in January 2012 seems unsustainable as industry is still beset with a number of domestic and global headwinds.
Not only is there a lack of clarity on diesel pricing, but the possibility of a cess on registration of new diesel cars being on the way has further put the industry under pressure.