Paris, July 9
China and India have entered more marked economic slowdowns while growth continues to moderate in most major industrial economies, the OECD said on Monday.

The Paris-based economic think-tank said its composite leading indicator for China, which provides a measure of future economic activity, eased to 99.2 in May from 99.4 in April, slipping further away from the long-term average of 100.

For India, the indicator fell to 97.8 from 98.0, also below the long-term average of 100.

"Composite leading indicators ... point to an easing of economic activity in most major OECD economies and a more marked slowdown in most major non-OECD economies," the Organisation for Economic Cooperation and Development.

The overall indicator for OECD countries, covering 33 countries, eased to 100.3 from 100.4, a level consistent with moderating growth.

The index for the euro area held steady at 99.6 for the third month in a row, a level indicating a slowdown.

The United States remained in growth territory with a reading of 100.9, though that was down from 101.1 in April. Japan saw its indicator ease to 100.7 from 100.8.

Outside the OECD, Brazil was alone in seeing activity pick up with a rise to 99.2 from 99.0. — Reuters

New Delhi, July 9
As corporate results for the first quarter of fiscal 2013 start trickling in, it is likely to be yet another weak quarter in an economic slowdown marked by tepid earnings growth.

According to Edelweiss Research, Q1FY13 is likely to be yet another quarter of lacklustre growth. A perceptible slowdown in the macro environment is likely to result in another below 10% earnings growth for Sensex companies.

“What is further disconcerting is the continued weakness in earnings breadth — almost a quarter of companies are expected to post an earnings decline of over 20%”, it says.

The report says the drawdown of revenue trajectory continues with topline growth expected to come in at 15.5% for Sensex companies. Importantly, however, operating profit or EBITDA margins will improve sequentially, as in a slowing demand scenario, businesses adjust by shifting focus from growth to profitability through cost rationalization.

The rupee has also depreciated 8% against the US dollar in Q1FY13 and this could potentially suppress reported profit growth on top of weak core earnings outlook.

Edelweiss said among major sectors, IT, auto, pharma and utilities may post healthy topline growth while growth for metals, construction and real estate could be relatively lower.

According to Kotak Securities, expectations from Q1 results are not very high, which may act as a cushion for the markets. Among sectors, capital goods, IT and logistics are expected to propel this growth. IT firms’ revenues are likely to be driven by the sharp rupee slide.

Edelweiss said EBIDTA margins for the sectors are expected to be lower on a year-on-year basis. Except for IT and power, other sectors are likely to report lower margins. The pressure on margins is due to relatively lower revenue growth, higher raw material prices (largely because of the rupee depreciation) and higher fuel costs.

According to analysts at Motilal Oswal Securities, technology, financials will dominate in a muted quarter while, on the other hand, global commodities (mainly, oil & gas and metals) will negatively drag Q1 earnings.

New Delhi, July 9
Representatives of industry bodies sought an economic revival package at their meeting on Monday with the Prime Minister’s Economic Advisory Council chairman C. Rangarajan.

Rangarajan, a former RBI governor and key aide of Prime Minister Manmohan Singh met the industry chambers to on the current economic outlook to get feedback from the industry on steps to boost growth.

Ever since Singh took charge of the finance ministry there has been renewed optimism about a turnaround in the economy and Rangarajan and Planning Commission deputy chairman Montek Singh Ahluwalia are playing key roles in formulating the revival plan for the economy.

At the meeting CII president Adi Godrej said macroeconomic conditions are worsening at a faster pace than anticipated and a economic revival package should be announced by the government and RBI in close coordination.

“I’m mindful of the compulsions of coalition politics and also that the current fiscal situation poses limitations to what the government can do compared to the situation in 2008-09. Unfortunately, that makes it even more imperative that such a package be announced now, since a few months down the line the economy would probably go beyond the threshold, where any credible intervention could salvage it”, Godrej said.

Among the reform measures, Godrej talked about include early implementation of the Goods & Service Tax (GST) as the latter itself will bring in an additional 1.5% of GDP and will be the single largest stimulus that the economy could get, fast tracking public sector disinvestment, facilitating out of court settlement for tax disputes, which has more that Rs 3 lakh crore stuck in the system.

Godrej also called for cutting expenditure by effecting correction of retail oil prices to control government’s subsidy burden and setting up an expenditure reforms commission to combat unnecessary nondevelopmental expenditure of the government.

Industry bodies also pressed for urgent reforms and cut in interest rates to arrest the slowdown. They also raised the issues of high interest rates, liberalization of FDI regime and implementation of the GST regime. Apex chamber Assocham urged Rangarajan to push “process reforms” that are yet awaited to follow the policy reforms initiated way back in 1991.

“The process reforms are as significant as the second generation reforms to address the current prominent challenges faced by the Indian economy and must be fast-tracked,” said Assocham president Rajkumar Dhoot.

"Spearheading the process reforms would help arrest India's falling economic growth, widening current account deficit, increasing short-term debt and public finance management which are posing serious challenges towards domestic economy," he added.

New Delhi, July 9
The finance ministry's committee on controversial tax proposal General Anti Avoidance Rules (GAAR) on Monday decided to modify the draft guidelines by reducing the number of illustrative examples.

The next meeting of the GAAR panel, which comprises officials of the finance ministry and representatives of FIIs and other stakeholders, will be held on August 12 and 13.

"The GAAR committee met today and discussed the examples (given in the draft guidelines)... some examples will be reduced, some will be combined", said a senior finance ministry official after the meeting.

The draft guidelines has provided 21 examples to illustrate the applicability and non-applicability of the GAAR, which was proposed by former finance minister Pranab Mukherjee to check tax evasion by foreign investors.

The provisions, however, invoked sharp criticism from the foreign and domestic investors, following which the government decided to postpone its implementation by one year to April 2013. The ministry had also constituted a committee to look into the concerns of investors.

Last month the committee came out with draft guidelines on GAAR to seek comments from various stakeholders. Among other things, the draft norms provide for a threshold limit for invocation of GAAR. It also clarified that the norms would apply to income accruing only after April 1, 2013.

The draft guidelines, however, got caught in a controversy following a release by PMO which said the prime minister had yet to see them.

"These (draft guidelines) have not been seen by the prime minister and will be finalized with the approval of the PM, who holds the finance portfolio, only after considering the feedback received," the PMO had said in a release barely 12 hours after the draft norms were released by the finance ministry on June 28. — PTI

New Delhi, July 9
Amid instances of counterfeiting of banknotes, the Reserve Bank of India said Monday it is working on launching plastic currency and will soon launch a pilot project for the same. "Counterfeiting of plastic notes is very difficult. So we are planning to launch some plastic money on pilot basis in 4-5 centres like Jaipur, Shimla and Bhubaneshwar. We’re working on it," RBI deputy governor H.R. Khan told reporters.

Under the pilot project for issue of plastic currency notes, notes of Rs 10 denomination would be distributed through the central bank's five regional offices.

The proposed shift to plastic currency notes, instead of the normal paper notes, is primarily aimed at checking the counterfeiting as also high cost associated with printing of paper currency, as they need early replacement due to soiling and mutilation.

These notes would have an average life span of 5 years compared to one year for the currency notes, and also these notes are cleaner than paper notes and it would be difficult to counterfeit the currency. The polymer notes were first introduced in Australia. — PTI

Bangalore, July 9
Uncertainty about spending by US and European clients in a weak global economy will likely weigh on the earnings of Indian outsourcers, dampening hopes that demand will pick up in the second half of the year.

India's $100 bn-a-year IT and back-office outsourcing industry earns about three-quarters of its revenues from customers in the US and Europe.

Analysts expect No.2 ranked Infosys Ltd, the only top-three vendor to provide a full-year forecast, to pare its revenue growth estimate for the current fiscal year to as low as 5% when it posts quarterly earnings on July 12.

The company in April had forecast 8-10 per cent growth for the fiscal ending March 2013, already disappointing investors enough to cut 13% of its market value on the day. It has gained about 2 per cent since. — Agencies

Chandigarh, July 9
The unavailability of ‘C Forms’, a declaration form to pay sales tax for interstate transactions, has become a major cause of concern for traders in Punjab. With the forms being in short supply for almost a year, traders say their suppliers in other states have stopped entertaining them till they send the forms along with the supply order.

Though the Punjab excise & taxation department claims there is no shortage of these C forms, enquiries made by The Tribune show the latter are in short supply in most major districts like Ludhiana, Jalandhar, Amritsar and Bathinda.

Traders across the state have complained these forms were hard to obtain and, as a result, they were unable to get goods from outside the state.

The C Form is a document which certifies that the goods sold outside Punjab have been properly accounted for by the purchaser. The form has to be submitted first by the purchaser to the seller who then submits it to the department with their quarterly VAT returns.

In case a form is submitted the trader is charged only 2% central sales tax on the goods he has sold outside the state. If this form is not submitted, the transaction is considered to have taken place within the state and trader is charged the regular applicable VAT.

Jagdeep Singh, a Mohali based businessman, said the C Forms have remained in short supply for more than a year now. “Any trader with a turnover of Rs 5 crore per annum, would require at least 150 of these forms a year. But every time we go to buy these forms we get just 5-10 forms per trader,” he said. He added because they were unable to send these forms to their suppliers outside Punjab, the suppliers were unwilling to sell goods to them.

Badish Jindal, president of the Punjab Small Industries Association, concurred. “Many suppliers from outside Punjab are now unwilling to deal with traders, on the pretext that they had to pay more sales tax on the transaction than the mandatory 2% tax on interstate transaction, because they are unable to submit these C Forms in their own state,” he said.

Excise & taxation commissioner A. Venu Prasad, however, denied there was any shortage of the C Forms.

“These forms are printed in a high security government printing press, so as to avoid misuse of these forms. But it is mandatory for the traders to give details of old utilization of these forms, before fresh forms are issued to them. Since the traders are not giving details of utilization of old forms, we cannot issue new forms to them,” he said.

Prasad added the Excise & taxation department would soon introduce online filing of the C Forms, which will resolve the issue.

Singapore, July 9
Looking to raise more than US $1 billion, India’s second largest telecom operator, Reliance Communications Ltd (RCom), has decided on the price range which it would keep for the Singapore initial public offering of its undersea cable unit, which could raise as much as $1 billion.

The firm, controlled by Anil Ambani, is looking to raise funds to ease a debt load of $7 billion as of March, which it had raised to finance the 3G spectrum purchase at the 2010 auction besides for funding some other projects and expanding the company’s capacity.

It has been unsuccessful in several past attempts to raise money by selling assets.

Global Telecommunications Infrastructure Trust (GTI Trust), which is structured as a business trust, plans to sell between 642.2 million and 757.6 million units at a price range of $1.09 to $1.32 a unit, IFR said. This translates to a distribution yield of 9.5% to 11.5% for 2013.

The yield range offered by RCom is higher than the 8.5% estimate for 2013 for Singapore-listed Hutchison Port Trust, which owns port assets in China. The size of the base offering ranges from $700 million to $1 billion.