Mumbai, April 1
Ruling out a cut in lending rates, bankers today said the status quo policy stance of the RBI will be followed by them, at least in the near-term.

"The bimonthly monetary policy came in on expected lines ... The only surprise in the policy is that there is no surprise... Since there is no fresh move in the policy, things (lending rates) will stay as it is for some more time," industry body IBA's chairman and PNB chief KR Kamath said. He was speaking to reporters at the customary post-policy press briefing at the RBI headquarters.

Country's largest lender State Bank of India's chairperson Arundhati Bhattacharya said there is no room for rate cuts now, adding that the RBI has hinted at stability in the monetary policy with the latest announcement. In the monetary policy review today, RBI Governor Raghuram Rajan left all key policy rates unchanged. But he halved the overnight call money borrowing limit to 0.25 of net demand time liabilities (NDTL) and increased the term repo window cap to 0.75% from 0.55, to contain volatility in the money market.

When asked about the impact of these twin measures, bankers said there could be a marginal spike in cost of funds. This would improve transmission of policy impulses across the interest rate spectrum and help establish market-based benchmarks for pricing various financial products akin to Libor for various currencies and different tenors, they said. "We have to calculate the actual cost of funds with this action. Definitely there will be some impact on the cost. But it also depends on which side of the market you are on. However, there can be some cost pressure because of this," Bhattacharya said.

Meanwhile, disappointed with the Reserve Bank's decision to hold key interest rates, India Inc today said the apex bank should have cut the repo rate to catalyse demand and induce investments while inflation is on a downward trajectory.

Emphasising that revival of growth should be the number one priority of the RBI at this time, industry groups said apprehensions about inflation rearing its head again may prove to be misplaced.

"At a time when growth impulses remain weak and WPI inflation has been on the declining trajectory, the RBI should have taken this opportunity to announce a cut in policy rates, which would stimulate demand and kick-start the investment cycle," CII Director-General Chandrajit Banerjee said.

The RBI today kept the key policy rate (repo) unchanged at 8%, and the cash reserve ratio static at 4%, saying retail inflation remains "sticky".

"Tweaking policy rates downwards would help lift business sentiments. We feel relying primarily on monetary policy for inflation management may not be a comprehensive approach. There are administrative fixes and fiscal measures that need to be adopted," Ficci president Sidharth Birla said.

"The RBI had the opportunity to give growth a chance to reinvigorate by reducing the policy interest rates and reviving the investor sentiment," Assocham president Rana Kapoor said.

If inflation continues along the glide path of reaching 8% by January 2015 and 6% by the year after, RBI Governor Raghuram Rajan said there won't be any rate hikes.

"The RBI status quo on policy rates is disappointing as the industrial growth is severely impacted by high cost of funds and other structural rigidities in the economic system like poor infrastructure and high transaction costs," said Sharad Jaipuria, president of the PHD Chamber. — PTI

New Delhi, April 1
The Finance Ministry has rejected a Parliamentary panel’s recommendation to raise the income tax exemption limit to Rs 3 lakh and to adjust other slabs saying it will lead to an annual loss of Rs 60,000 crore to the exchequer.

The fresh draft of the DTC Bill, posted on the website of the Finance Ministry today, has lowered the age for tax exemption for senior citizens to 60 years from 65 years.

The final view on the draft, which has been prepared by Finance Minister P Chidambaram, will be taken by the new government to be formed after the general elections are over in mid-May.

The Parliamentary Standing Committee headed by senior BJP leader Yashwant Sinha had proposed no tax on income of up to Rs 3 lakh per annum, 10% for Rs 3-10 lakh, 20% for Rs 10-20 lakh and 30% on annual income beyond Rs 20 lakh.

“The recommendation is not acceptable as it will result in huge revenue loss. The total revenue loss on account of recommended changes in slabs and removal of cess works out to Rs 60,000 crore approximately,” said the proposed Direct Taxes Code - 2013, released today.

The Finance Ministry said the recommendations of the Committee “were not in harmony” with the broad taxation policy and have not been incorporated in the revised Code.

As per the current structure, there is no tax on income of up to Rs 2 lakh per annum; 10% on Rs 2-5 lakh; 20% on Rs 5-10 lakh and 30% on income beyond Rs 10 lakh.

In his Budget speech, Finance Minister P Chidambaram had said that revised DTC was ready and will be placed in public domain for discussions. It proposes 35% tax rate for individual and Hindu Undivided Family (HUF) having income exceeding Rs 10 crore.

New Delhi, April 1
India can achieve GDP growth rate of over 6% provided systemic reforms are carried out quickly by the new government, said Ajay S Shriram, the new president of CII.

Unveiling the CII action theme for the year as ‘Accelerating Growth, Creating Employment’, Shriram said, “With slowing growth and high inflation adversely impacting employment, CII will urge the next government to focus on reviving growth and generating new jobs.”

CII has called for immediate introduction of Goods and Services Tax, containing subsidies, monetary easing and fast-tracking of stalled projects.

In its 100-day action agenda for the new government, the industry body said a strong inter-ministerial coordination group is required to resolve sticky issues like the "mining conundrum" and "raw material securitisation" for sectors like steel.

"Economic growth and investments have stagnated. We require rapid economic growth for job creation. We will share the agenda with the new government and discuss each point with them. Implementation of GST will boost GDP by 1.5-2%," Shriram said.

However, Shriram added that in case of a fractured mandate in the ensuing general elections, "There would be loss of investor confidence and jobs would be destroyed in organised sector with no signs of economic reforms". A strong economic revival package and right implementation of policies by the new government can help create as many as 150 million jobs in the next 10 years, he said.

New Delhi, April 1
With the economy showing signs of improvement, the real estate sector is pinning hopes on the elections for a recovery that will boost sentiments and lift home buyer sentiment.

Real estate consultancy, JLL India said in a report while all eyes are on the General Election, the real estate sector is holding its breath for the potential optimism that is expected once the results are out. This optimism is expected to boost transactions and lift home-buyer sentiment, it said.

The report said 2012 and 2013 were not the best years for the Indian realty market and the slowdown impacted all asset classes, except in a few pockets. There is a sense of hope among developers for a positive post-poll scenario, the report said.

A recent Assocham report had also pointed out that real estate will be among the sectors which will benefit with the formation of a stable government after the General Election.

The stock market has already seen the sentiment being mirrored with real estate stocks such as DLF, Unitech among others, being the gainers in trade in the past few weeks. With the stock market breaking all previous records, Shrikant Chouhan, head of technical research, Kotak Securities, said real estate sector is turning stronger and might attract fresh funds with a longer term view.

A slight improvement in sentiment has been detected with better conditions in the economy. ZyFin Research has come out with its consumer outlook index for March. It shows that the Real Estate Sentiment Index inched up marginally, even as spending on other big-ticket items, such as vehicles and durables, weakened further.

The real estate sector has been going through a tough phase in the past two years with declining sales. A research report by Knight Frank India shows that sales volume of 25 listed real estate companies halved by almost 43% over past eight quarters across India. Real estate demand in the northern region plummeted the maximum.

Delay in approvals, high cost of funds and slow uptick in the sales volume dried up the liquidity for the cash-starved real estate companies which in turn logjammed the construction activity across India, the report said.

Developers say with the improvement in the economy, real estate sector will benefit from the policy push by the new government.

New Delhi, April 1
Terming SpiceJet's offer of rupee one fare across its domestic network as "predatory" and a "malpractice", aviation regulator DGCA today came down heavily on the no-frill carrier and asked it to stop such pricing immediately.

Hours after SpiceJet offered fares as low as rupee one valid for domestic travel till next year, the Directorate General of Civil Aviation (DGCA) shot off a strongly-worded directive to the airline asking it to stop the three-day offer "immediately".

Such pricing was "not only predatory", but it amounted to "malpractice" under Rule 135 of the Aircraft Rules relating to air tariff, official sources said.

The fact that only one or two seats were being offered on each flight at the rate of one rupee amounted to "deceiving the travelling public", they said, adding that the airline was making such an offer for 91 sectors across the country.

Apart from the latest rupee one offer, the airline also announced two special schemes, offering the travellers Rs 799 and Rs 1499 ticket prices, excluding taxes and airport fees, with a booking window of three days, starting today.

The travel period for the tickets booked under these schemes would remain valid till March 28 next year from this July. — PTI

New Delhi, April 1
Cars sales showed signs of picking up in March after the excise duty cut announced in the Budget, with Honda, Nissan and Ford India posting improved sales, although Maruti Suzuki, Toyota and Hyundai reported decline.

Maruti Suzuki India today reported a 5.5% decline in sales in March at 1,13,350 units as against 1,19,937 in the same month last year. On the other hand, hit by the ongoing labour unrest and subsequent drop in production, Toyota Kirloskar Motor's car sales declined 56.6% to 9,160 units in March as compared to 21,143 units sold in March, 2013. The company exported 954 units of Etios series last month.

However, riding high on the sales of Amaze and new City, Honda Cars India reported 83.4% increase in its domestic sales at 18,426 units in March.

Hyundai Motor India Ltd reported 8.37% decline in total sales at 51,708 units for last month.

BRIEFLY

ADB pegs India’s GDP growth at 5.5% in FY15
New Delhi: Improved performance by industry and services is expected to drive India's economy to expand by 5.5% in 2014-15 but this is well below potential and going forward the country will see renewed growth on improved investment and consumption, says an ADB report. "We really had a dip in growth rate to 4.9% in the year which ended yesterday. But we do expect some growth rate in the current year starting today at 5.5% and further to 6%, but this is well below the potential,” said Narhari Rao, deputy country director, ADB. — PTI

Jet Airways expands code share pact with Air France
Mumbai: Jet Airways on Tuesday said it has expanded its code share pact with Air France signed last June, which will enable passengers of both airlines seamless travel across destinations. The expanded agreement provides for enhanced network connectivity to passengers to 12 major cities across Europe and the UK, Jet Airways said. — PTI

CPI-IW for February up 1 point at 238
New Delhi: The All-India Consumer Price Index for Industrial Workers (CPI-IW) for February increased by 1 point and was pegged at 238 points. Retail inflation for industrial workers eased to a two-year low of 6.73% in February due to softening of prices of food items. — PTI

Continental launches radial tyres for trucks
New Delhi: International tyre manufacturer and automotive supplier Continental has started production and distribution of radial truck tyres in the Indian market. With an initial annual production capacity of 2,20,000 radial truck tyres, a dealer network of more than 1,400 outlets and sales and customer service teams in more than 70 cities across India, Continental takes the next step in expanding its reach in India after acquiring tyre manufacturer Modi in 2011. — TNS