Washington, October 8
The International Monetary Fund (IMF) today lowered its projection of India's growth rate to 3.75% in 2013 from 5.7% estimated earlier on account of poor demand and weak manufacturing and services sector performance.

The IMF, in its latest World Economic Outlook report, also said India is among the economies that may require more tightening to address inflation pressure.

"In India, growth in fiscal year 2013 is expected to be around 3.75%, with strong agriculture production offset by lacklustre activity in manufacturing and services, and monetary tightening adversely affecting domestic demand," the IMF said.

"For fiscal year 2014, growth is projected to accelerate somewhat to 5%, helped by an easing of supply bottlenecks and strengthening of exports," according to the report released on the sidelines of the IMF and World Bank meetings here.

In April, the IMF estimated India's GDP would expand at 5.7 per cent in 2013 and at 6.2 per cent the following year, indicating the country's declining growth had bottomed out.

In terms of GDP at factor cost, India's growth is estimated to be 5 per cent in fiscal year 2012, at 4.25 per cent in 2013 and at about 5 per cent in 2014, it noted in the latest report. In 2012, India's growth rate was 3.2 per cent, while in 2011 it was 6.3 per cent.

According to the IMF report, in India and Brazil, infrastructure and regulatory bottlenecks slowed output supply in the face of still-strong domestic demand. As a result, external pressures have grown in these economies, it said.

The Asian Development Bank on October 2 lowered India's growth projection for 2013-14 to 4.7% from 6% .

Last month, the Prime Minister's Economic Advisory Council cut its growth forecast for this fiscal to 5.3% from 6.4%. — PTI

New Delhi, October 8
Sectors like information technology and auto are expected to post good results for second quarter of financial year 2014 while cement, metals and capital goods sectors are likely to be a drag.

According to a preview of the quarterly results, which will begin trickling in from next week, by Kotak Securities, IT and auto are expected to predominantly propel the overall growth. Revenues of IT companies are expected to be driven by the near 13.5% rupee depreciation.

On the other hand, cement, metals and capital goods sectors are expected to be a drag largely due to the lower investment activity in infrastructure and weak demand. “We will watch out for the order bookings and order execution issues, if any, in construction and capital goods sectors”, the report said.

Operating profit margins for the sectors are expected to be higher year-on-year. Auto, FMCG, metals and IT sectors are expected to report improved margins whereas those in sectors like oil & gas, capital goods, construction and cement are expected to deteriorate. The rupee depreciation should help margins in the IT sector.

The report said higher raw material costs due to rupee depreciation, lower revenue growth and higher freight tariff are expected to impact margins for domestically oriented sectors.

“We still have to see big commitments being made in investments, especially by the private sector. The new RBI Governor has clearly spelt out that his immediate focus is inflation, although he is committed to supporting growth. Moreover, the unease over potential liquidity withdrawal still persists. We opine that, if the markets have to sustain the current levels and move up, it will need to have more confidence in the medium-to-long term growth rates of corporate India”, it said.

Angel Broking said in a note the earnings performance is expected to be largely supported by IT and metal stocks and new private banks while earnings for PSU banks and capital goods stocks are likely to continue weighing on the overall performance.

It expects a moderate revenue growth on a year-on-year basis aided by the performance of IT, auto and oil and gas sectors.

The note said the cyclical headwinds from slower pace of economic growth, elevated interest rates owing to concerns on inflation, and the political overhang of upcoming elections are expected to continue to weigh on corporate earnings.

New Delhi, October 8
The automobile manufacturing companies have reported the lowest-ever growth in April-September period of the current fiscal in the past over a decade.

According to data released by the Society of Indian Automobile Manufacturers (SIAM) today, car dispatches to dealerships between April and September this year have been the slowest since 2002-03 this fiscal or the slowest in 11 years.

It said the decline of 4.67% in car sales in the first quarter of this fiscal was the worst since 2002-03, when sales dropped by 6.96% in the same period.

Releasing the first quarter data here, SIAM president Vikram Kirloskar says consistently high vehicle finance rates, a slowing economy and the absence of any fiscal stimulus specific to the automobile industry despite makes it difficult to predict if the remaining six months of 2013-14 will be any better. Though dispatches have improved across most vehicle categories in September, this could partly be because of manufacturers stocking dealerships in anticipation of higher offtake.

Officials pointed out that at least a third of the car manufacturing capacity in India have been lying idle so far this fiscal with the country witnessing an unprecedented sales slump.

Kirloskar said owing to the slump, there is currently an excess capacity of about 25-30% in the passenger vehicle segment.

However, on the uptake the car sales rose to 1,56,018 units in September, the highest level this fiscal. Domestic passenger car sales grew 0.73% in September from 1,54,884 units a year earlier.

New Delhi, October 8
The easing of liquidity measures undertaken by the RBI will benefit banks and help it to focus on growth.

India Ratings said the RBI’s measures to ease liquidity will benefit banks as they enter the ‘busy’ credit season. The gradual unwinding of July’s extraordinary liquidity squeeze also reflects RBI’s growing confidence in managing the current account deficit (CAD) in the short term. CAD is likely to shrink considering policy initiatives on both foreign exchange demand (squeezing gold import) and supply (subsidised swap window till November 2013). According to India Ratings, the liquidity easing measures will immediately be mildly positive for banks’ net interest margin (NIM), unless interest cost savings are passed on to borrowers by reducing lending rates to support the government’s drive to boost growth.

Interest costs will benefit from over 100 basis points fall in short-term money market rates since their peak in mid-August 2013.

The report expects the ‘easing liquidity’ policy stance to continue through the rest of this quarter. This is because the rupee is likely to move within a narrow band and inflation may somewhat ease on the back of increased farm produce.

Assocham president Rana Kapoor said the steps taken by RBI will fulfil objectives to reduce volatility in the interest rate market and lower the weighted cost of borrowing for banks and deepen the money market through development of term repo borrowing.

The return of rupee stability on the back of unconventional steps has provided RBI the flexibility to gradually roll back its recent tightening measures. With external sector developments showing a marked improvement and evidence on the utility of interest rate defence remaining hazy, the current set of easing measures will help RBI to focus on growth risks, he said.

New Delhi, October 8
PNB and Oriental Bank of Commerce (OBC) today cut interest rate on auto and consumer durable loans by up to 2.50% to cash in on festive demand.

Rate of interest on car loans has been reduced by over a per cent to 10.65% on fixed basis, PNB said.

Besides, it said, there will be full waiver of upfront fee and documentation charges. In case of car loan, the bank will finance to the extent of 100 per cent of ex-showroom price of car.

The festival offer is valid up to January 31.

According to OBC, interest rate on commercial financing of four wheelers has been reduced to 12% from 12.25%. — PTI

Chandigarh, October 8
The National Bank for Agriculture and Rural Development (Nabard) will now finance construction of warehousing facilities in Punjab and Haryana directly. The government has set aside Rs 5,000 crore corpus for creating additional storage facility under the Nabard Warehousing Scheme for giving direct loans to public and private sector for construction of warehouses, silos and controlled atmosphere cold storage.

Naresh Gupta, CGM, Nabard, said today since there was a shortage of 2.5 million metric tonnes of storage space in Punjab, and 2.2 million tonnes in Haryana, this direct financing would help in attracting private persons to add storage capacity.

Officials also said loan recovery by Haryana State Cooperative Agriculture and Rural Development Bank (HSCARDB) in Haryana is ‘abysmally’ low at 38%. "The overall loan recovery by the state-owned bank is just 38% and in some cases it is as low as 26%," said an official.

Comparatively, the state cooperative loan recovery in Punjab was about 80 per cent. "We had even stopped refinancing to Haryana state cooperative bank for some time on account of poor loan recovery. In the first six months of current fiscal, we have not given any refinance," said the official.

New Delhi, October 8
The Supreme Court today issued a notice to the Centre seeking its response to BJP leader Subramanian Swamy’s PIL pleading for a CBI probe into the approval given to the Rs 2,058-crore Jet-Etihad Airways deal, the single largest foreign direct investment (FDI) in the country’s aviation sector.

A Bench comprising Chief Justice P Sathasivam and Ranjan Gogoi, however, refused to immediately stay the deal without seeking the Centre's views. The SC notice will go to the ministries of finance, commerce and external affairs, besides Jet Airways, the Abu Dhabi-based Etihad Airways, Foreign Investment Promotion Board (FIPB), Department of Industrial Policy and Promotion and Directorate General of Civil Aviation (DGCA). Swamy said he had come to the SC as there was no response from the Prime Minister to his communication raising several apprehensions over the deal which was against public interest and amounted to squandering of natural resource - the sky and air space.

He said the deal was cleared against the advice of Parliament Select Committee and other advisory bodies. Even the Comptroller and Auditor General (CAG) had observed that there was reckless allocation of air space to foreign airlines.

On April 24, Jet Airways had announced the sale of 24 per cent equity to Etihad Airways for about Rs 2,058-crore as part of a strategic alliance aimed at a major expansion of its global network. The Union Cabinet approved the deal last week, days after clearances by the market regulator (SEBI) and FIPB. Swamy also questioned the Centre's decision to execute the deal in favour of the United Arab Emirates under the existing Air Service Agreement between India and the Gulf country.

Contending that the deal was arbitrary, irrational and a mala fide act for grant of largesse in the form of a bilateral agreement, he sought a court-monitored probe into the issue which was of national and public interest.

New Delhi, October 8
The Indian Railways has sought the help of the private sector to improve its capital expenditure and evolving technology to reduce accidents.

Speaking at the International Rail Conference, Hemant Kumar, Additional Member - Mechanical Engineering, Railway Board, stressed zero tolerance for accidents in the railways. “The rolling stock diagnosis assumes an important plank of the railway safety system which is designed to move 2.1 billion tonnes of freight and 15 billion passengers by 2020," he said.

These, he said, require large capital infusion which cannot be undertaken only within the purview of the government. The private sector participation is crucial to bridge the resource gap. He mentioned about the use of LNG and CNG in the railway system to reduce the effluent discharge and to enhance fuel efficiency.

William P Ainsworth, president and CEO, Electromotive Diesel Inc, USA, stressed the synergy between India and the US in the development of railway system.

CII Rail Transportation Committee chairman Naresh Aggarwal underscored the need for accelerating the pace of PPP model of collaboration in the railways.

Gurgaon, October 8
The Haryana wing of National Rural Health Mission (NRHM) has called upon the industry to come forward to contribute in the health sector in Haryana as part of their Corporate Social Responsibility (CSR) for strengthening health services delivery systems.

Secretary of Health Department, Dr Rakesh Gupta Gupta sought collaboration of companies at an industry engagement meeting organised by the CII in collaboration with the NRHM, Haryana, for strengthening CSR.

“CSR is a rising activity across the world, including India. Over the past decades, growing number of companies have recognised the business benefits of CSR policies and practices. Civil societies, consumers and other actors have increased pressure on companies to adhere to social and environmental standards and this pressure is having a positive impact on the business enterprise in India. As a result, all profitable companies, being the corporate citizens, are today contributing or are planning to contribute to the social and environmental development of the country by participating in well-structured CSR activities”, said Gupta.

BRIEFLY

AFCONS-IRCON JV bags B’desh project
New Delhi: AFCONS Infrastructure Ltd., a Shapoorji Pallonji Group company, in a joint venture with Indian Railways’ sister concern IRCON Ltd, has bagged a contract from Bangladesh Railways for the work of a railway bridge. The project, estimated to cost around Rs 453 crore, is expected to be completed in 30 months. — TNS

NTPC adds 500 MW generation capacity
New Delhi: NTPC said on Tuesday its installed power generation capacity has increased to 41,684 MW with the commissioning of another 500 MW unit at its Rihand project in Uttar Pradesh. Unit-VI, having generation capacity of 500 MW, of Rihand super thermal power project was commissioned on October 7, NTPC said. — PTI