Washington, October 7
The Indian economy, which accounts for 80% of South Asia's output, is set to grow by 6.4% in 2015-16 as against 5.6% in 2014-15, the World Bank has said.

With economic activity buoyed by expectations from the newly elected government of PM Narendra Modi, “India is benefiting from a Modi dividend,” the World Bank said in its twice-a-year South Asia Economic Focus report yesterday.

Over the next year or so economic growth should be supported by the recovering US economy that would provide a market for Indian merchandise and service exports, it said.

“The outlook over the next years for South Asia indicates broad economic stability and a pick-up in growth with potential risks concentrated on the fiscal and structural reform side,” said Martin Rama, Chief Economist for South Asia, at the World Bank. “Future growth will increasingly depend on strong investment and export performance,” he said.

Private investment is expected to pick up thanks to the government’s business orientation, and the declining oil prices should boost private sector competitiveness. But economic reforms will be needed for India to achieve its full long-term growth potential, the report argued.

The report said the region’s economy would expand by 6% in 2015 and by 6.4% in 2016 compared to 5.4% this year, potentially making it the second fastest growing region in the world after East Asia and the Pacific. Other countries in the region are Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka.

The World Bank said India's long-term growth potential remains high due to favourable demographics, relatively high savings, and policies and efforts to improve skills and education, facilitate domestic market integration and incentivise manufacturing activities.

In the medium term, with the economy still below potential and reforms on a gradualist path, growth is expected to accelerate from 5.6% in 2015 to 6.4% and 7% in 2016 and 2017.

Inflation is expected to decline with the monetary policy switching to inflation targeting while the current account deficit is expected to widen somewhat as import demand and capital inflows rise.

Fiscal consolidation is expected to continue with stronger revenue mobilisation, while the oil subsidy burden could decline to 0.6% of GDP if benign global crude prices persist, it said. — PTI

New Delhi, October 7
Nokia Corp today decided to suspend operations at its Chennai mobile handset plant from November 1 after Microsoft terminated an agreement to buy mobiles from the unit, throwing the future of about 1,100 employees into uncertainty.

"Microsoft has informed Nokia that it will be terminating the manufacturing services defined in the agreement with effect from November 1, 2014. In absence of further orders from Microsoft, Nokia will suspend handset production at the Sriperumbudur facility from November 1," Nokia said in a statement.

In September 2013, Nokia announced it would sell its devices and services (D&S) business, including assets in India, to Microsoft for $7.2 billion by March 2014.

The deal was completed on April 25, but the Chennai facility could not be transferred to Microsoft because of legal issues related to tax demand by the Indian government. Nokia started manufacturing in Chennai in January 2006 and exported to markets including in the Middle East and Africa, Asia, Australia and New Zealand from there.

In March, the Tamil Nadu Government served a Rs 2,400 crore notice on Nokia, saying the firm had also sold products from the Chennai plant in the domestic market instead of shipping them overseas. In a separate tax case, the Supreme Court had ordered Nokia India to give a Rs 3,500 crore guarantee before it transfers the plant to Microsoft.

"Unfortunately, the continuing asset freeze imposed by the tax department prevents Nokia from exploring potential opportunities for the transfer of the factory to a successor to support the long-term viability of the established, fully functional electronics manufacturing ecosystem," the statement said. — PTI

New Delhi, October 7
Prime Minister Narendra Modi has commended bank officials for successfully rolling out the Pradhan Mantri Jan Dhan Yojana.

In an email to bankers, the PM said he was delighted by the unprecedented response the scheme has received so far. He said over 5 crore bank accounts had been opened within five weeks of the launch against a target of 7.5 crore accounts in the first year.

Cautioning the bankers, he said, “As we move ahead from here, the journey is bound to become more difficult and achievements harder to come by. Reaching the last few who do not have bank accounts is going to be progressively more difficult. We must not slacken our efforts in ensuring full coverage.”

"This is also the time to reflect and make mid-course corrections as required. New accounts also need to be kept alive and properly utilised. Facilities such as e-KYC must be gainfully utilised. Banks and bank mitras will now have to play a proactive role,” he said.

New Delhi, October 7
The BSE Sensex today fell by 296 points to close at a nearly two-month low due to weak European markets on the news of Germany's worst industrial output in over five years.

The market saw widespread losses in metal, healthcare, consumer durables and capital goods sector stocks on capital outflows and investment by retailers ahead of the earnings season amid a mixed trend overseas.

After opening 137 points lower, the 30-share index continued its slide to touch the day’s low of 26,250 points before ending the day at a nearly two-month low of 26,271 points, a level not seen since August 14, registering a steep fall of 296.02 points or 1.11%.

Sanjeev Zarbade, vice-president, Private Client Group Research, Kotak Securities, said the Sensex lost over 200 points on weak global cues. He said the selling pressure gained momentum after the economic data showed that Germany posted its worst industrial output figures fall for five-and-a-half years. Following this, the European equities sold off.

"Investors are awaiting comments from the Federal Open Market Committee (FOMC), due for release on Wednesday, regarding its take on the timing of interest rate hikes especially in light of the strong job data," he said.

Vinod Nair, Head—Fundamental Research, Geojit BNP Paribas Financial Services Ltd, said after holidays, the Indian market moved in-line with global downfalls as the data weaken effecting world economic growth.

"Global liquidity continued to move toward the safe US dollar compared to commodity, currency and debt. As roll in global risk, lately we have seen a fall in equity across developed countries which otherwise maintained stable since the last few months. The same factors impacted India where expectation is high while offering higher volatility to the Q2 FY15 result which continues to expect fair numbers rolled by good performance in the Q1,” he said.

Of the 30 Sensex shares, 23 closed lower led by Hindalco (down 4.35%), Sesa Sterlite (4.32%) and Cipla (3.67%), while NTPC, Gail and Tata Motors remained major gainers.

Mumbai, October 7
Mahindra Two-Wheelers, a fringe player in the domestic market, today signed a pact to acquire a 51% stake for euro 28 million (about Rs 217 crore) in Peugeot Motocycles, a part of the euro 54 billion French auto major PSA Group.

“Under the binding offer, Mahindra Two-Wheelers would infuse 15 million euros into Peugeot Motocycles to finance projects implemented through a strategic partnership and the further sale of shares by PSA, which would allow us to take a 51% stake in Peugeot Motocycles,” M&M executive director Pawan Goenka told reporters here.

Mahindras will also invest another euro 13 million at a later stage. The transaction is subject to the Works Council consultations as a part of the employee dialogue process and anti-trust law, he said, but added that “We hope to close the deal in three months.”

Peugeot is well known for its four and two-wheelers in Europe and is the world's oldest two-wheeler maker. However, its two-wheeler business has been undergoing a trunaround.

In a statement, Peugeot Scooters managing director Frédéric Fabre said: “The strategic partnership with Mahindra & Mahindra Group will give us the opportunity to accelerate our geographic expansion. These are all opportunities to secure the future of Peugeot Scooters and give a future industrial site Mandeure.” Mahindras will continue with the current management. Replying to a query on full control, Goenka said: "Our focus is continuity on a majority stake and we are not thinking going beyond 51% now."

The loss-making Peugeot Motocycles employs 500 persons and produces about 25% of the firm’s scooters, mainly high-end models in the French unit. Its Chinese plant employs 300 persons and produces 65% of Peugeot Scooters’ volume. — PTI

New Delhi, October 7
The gross direct tax collection during April-September of the current financial year is up by 15% and stood at Rs 3.46 lakh crore as against Rs 3.01 lakh crore collected during the same period last year.

The gross collection of corporate tax has shown an increase of 15.31% to Rs 2.22 lakh crore as against Rs 1.93 lakh crore last year.

The collection of personal income tax, including STT and wealth tax, is up by 14.37% and stood at Rs 1.23 lakh crore as against Rs 1.08 lakh crore collected during the same period last year. Securities transaction tax (STT) stands at Rs 3,223 crore, up by 45.83%. The net direct tax collection is up by 7.09% and stood at Rs 2.68 lakh crore as compared to Rs 2.51 lakh crore during the same period in the last fiscal.

Advance tax collections have shown a growth of 15.28% during the first half of the year as against the growth of 7.66% shown at the same time previous year. Growth in tax deduction at source (TDS) is 9.47% as against 14.22% in the same period last year.

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