Indian Economy - News & Updates - Archive

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India economy headed higher, reforms in sight: analysts​

31 May 2009, 0900 hrs IST, AGENCIES

NEW DELHI: India's economy is on the upswing with eyes now keenly focused on July's planned budget for new market-opening moves by the freshly Financial crisis re-elected Congress government, analysts say.

The country logged unexpectedly strong 5.8 percent growth in the final quarter to March 2009, against forecasts of 5.0 percent, figures late last week showed, prompting analysts to say the economy had turned the corner.

"We see a new growth cycle taking shape with the first stop seven percent and then eight percent," said Rajeev Malik, economist at Macquarie Securities.

India's economy expanded by 6.7 percent in the year to March 2009, down from nine percent a year earlier.

But the country of nearly 1.2 billion people is performing far better than many others caught in the global slump, thanks to its vast, resilient domestic market, hefty government spending and aggressive rate cuts, analysts say.

Foreign capital is pouring back into India with the benchmark Sensex share index near a nine-month high of 14,625 following a spurt in May after the Congress party was swept back to power with its biggest seat haul in 18 years.

The strong mandate allows the Congress to govern without the support of the communists who propped up the government in parliament during its last term.

Economists called the Congress win a "game changer" for the economy because it raises hopes of political stability for the next five years and the introduction of economic reforms that had been blocked by the Left.

There has already been a flurry of announcements by new ministers promising such moves as loosening state-controlled fuel pump prices, which would help refinery profits, and cutting mobile call rates to propel India's explosively growing cellular sector.

Economic growth is forecast at around six percent in the first half of the year and closer to seven percent in the second amid "green shoots" signs such as higher car sales and cement output.

Next year, economists expect expansion of eight percent.

"We expect a pick-up in economic activity from lower borrowing costs and higher government spending which is feeding through the system," said Shubhada Rao, economist at Yes Bank.

In another positive sign, the Federation of Indian Chambers of Commerce and Industry (FICCI) announced Saturday a sharp upturn in business optimism.

Some 57 percent of 300 firms polled in the final quarter to March declared economic conditions were "moderately to substantially" better -- up from the nine percent in the previous quarter who reported an improvement.

"Companies are looking forward to a recovery on the basis of their order books and performance," FICCI economist Anjan Roy said.

Economists are now focused on the budget that Finance Minister Pranab Mukherjee has promised to present in the first week of July to see what steps he will take to open up India's still relatively inward-looking economy.

Mukherjee said last week the government would press ahead with some long stymied reforms "in the financial sector and real economy" to make it more competitive and draw foreign investment.

India economy headed higher, reforms in sight: analysts- Indicators-Economy-News-The Economic Times

 

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Exporters to get help in Budget, says Anand Sharma​

NEW DELHI: The government will unveil measures in the Budget for helping exporters who are hit hard by recession in the developed economies, new
Commerce and Industry Minister Anand Sharma said on Friday.

"We shall look at the possibilities for more incentives. I will be discussing with the Finance Minister...some measures which will be announced in the next Budget," Sharma told reporters after taking charge of the twin portfolio of the commerce and industry.

He would soon be interacting with the trade and industry bodies to assess the difficulties faced by them. "Whatever is required would be done in the coming weeks and months," he said.

However, Sharma ruled out a "comprehensive review" of the controversial amendments in the Foreign Direct Investment (FDI) policy unveiled by his predecessor Kamal Nath in February.

"I see no reason why a comprehensive review is required at this stage. Let's see how it functions," he said.

Sharma, 56, who was the Minister of State for External Affairs in the previous government, said India would seek greater global economic engagement.

Negotiations for the market-opening free trade agreements with ASEAN and South Korea along with a new India-Nepal treaty have been completed. "We shall be taking all this to Cabinet soon," he said.

India's exports, which had clocked a healthy growth of over 30 per cent in the first half of 2008-09, entered into the negative zone in October 2008.

The country's exports managed to show a meager growth of 3.4 per cent in 2008-09 aggregating $ 168 billion.

The declining output of the manufacturing sector pulled down the economic growth rate in the fourth quarter of 2008-09 to 5.8 per cent and 6.7 per cent in the entire fiscal.

Sharma said the government had announced stimulus packages which has has helped. "There are promising signs of revival of our industry."

He said additional steps to facilitate exports, including reduction in transaction costs, would be announced in the forthcoming foreign trade policy, which will be unveiled in August.

Expressing concern on the plantation sector, the minister said the government would soon announce a relief package for them.

Exporters to get help in Budget, says Anand Sharma- Foreign Trade-Economy-News-The Economic Times

 

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Good news: At 6.7%, GDP grows more than expected​

NEW DELHI: India's economy is estimated to have grown at 6.7% in 2008-09, the year of downturn and global financial meltdown. While this is only a
bit higher than the 6.5% most in government were expecting, it is a lot better than the 5-5.5% that independent economists and analysts had projected.

The reaction to the unexpectedly good news was immediate. The official data released on Friday morning saw stock markets rejoicing with the BSE sensex rising 329 points to cross 14,600 on a day when most market analysts had anticipated profit booking after a 700-point climb over the previous two trading sessions.

Industry barons are now confident that 9% may be achieved in 2009-10 on the back of the expected rebound.

The growth bucks all global projections that had estimated sub-6% growth of Asia's third largest economy. The RBI too in its monetary policy review earlier had projected GDP to grow at 6.5%, a view shared by many ministers and top officials.

Given the growth and rise in the rupee's value against the dollar, India is again a trillion-dollar economy. It also means per capita income has crossed Rs 3,000 per month for the first time ever.

The 5.8% growth in the fourth quarter, which rode on reasonably robust growth in some services sectors like construction (6.8%), indicates that the downturn may be less severe than earlier feared and the recovery may be closer at hand.

It also appears that the over Rs 3 lakh crore injected into the system through three stimulus packages has started showing results. The Rs 70,000 crore loan waiver for farmers, high salaries to government employees and increased expenditure on the National Rural Employment Guarantee scheme after it was made nationwide have helped stemmed the downturn.

A report by Goldman Sachs pointed out that government consumption, which grew by 22% in Q4, was the largest contributor to boosting growth.

Good news: At 6.7%, GDP grows more than expected - India Business - Business - The Times of India

 

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Sensex at nine-month high, Nifty above 4500​

1 Jun 2009, 1035 hrs IST

MUMBAI: The Bombay Stock Exchange benchmark Sensex climbed to hit its nine-month high, rising over 281 points in early trade on Monday, with metal
and realty stocks leading the rally, supported by firming global equity markets.

The 30-share index, which had gained nearly 1,040 points in the last three sessions, jumped 281.56 points, or 1.65%, to 14,906.81, a level last seen in September 2008.

Similarly, the wide-based National Stock Exchange index Nifty regained the 4,500-points level to quote 90.15 points higher at 4,539.10.

Stock brokers said series of positive factors, such as firming global markets, good GDP numbers and flow of funds into the domestic markets, mainly buoyed on the trading sentiment.

Reports that FIIs had invested over Rs 20,000 crore in the markets last month, also lifted spirits, they added.

Major gainers, which extended support to the Sensex, were Reliance Industries up 1.01% at Rs 2,300.05, Reliance Infra by 3.07% to Rs 1,316.10, RCom by 5.79% at Rs 323.50, Infosys Technologies by 1.25% to Rs 1,621.95 and DLF Ltd by 4.51% to Rs 421.50.

Besides, State Bank of India rose 1.28% to Rs 1,893, ICICI Bank 1.65% to Rs 752.90, HDFC Bank 1.11% to Rs 1,458.40, Sterlite Industries 1.98% to Rs 635 and Tata Steel 3.37% to Rs 420.

Meanwhile, the Hong Kong's Hang Seng was up 2%, and Japan's Nikkei up 1.6% in early trade.

Sensex at nine-month high, Nifty above 4500 - India Business - Business - The Times of India

 

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India’s syndicated loans up 9% in Jan-May​

1 Jun 2009, 0038 hrs IST

NEW DELHI: India's syndicated loans totalled $14.1 billion for the period January-May this year, highlighting one of the few nations to post a 9%
year-on-year volume increase (in proceeds) over the corresponding period in 2008.

In fact, India is the only country other than Spain to have registered an increase in borrowings till May this year. Experts say that this, along with a modest improvement in sectors like steel, cement and capital goods, is a positive sign for the economy.

The domestic debt markets were bolstered by the recent $3-billion loan syndication for Indian Oil Corporation to finance its Paradip refinery.

The majority of domestic borrowers this year have been energy and power companies, borrowing a combined $8 billion from seven issues, or 60% of the overall India's syndicated loan market, an analysis by Thomson Reuters shows.

Says Rajagopal S, partner mergers and acquisitions Grant Thornton India: "There has definitely been an increase in debt market activities in the past few months. A general decline in interest rates (as evidenced by a sharp fall in Gilt yields) coupled with an increase in appetite for risk amongst financial institutions are seen as key reasons for heightened activity in debt capital markets. At a time when bank lending is yet to fully pick up this is being viewed by corporates as an alternate source of debt capital to address liquidity constraints and extend maturity of current debt obligations. However, we believe that corporates are yet to fully resume capex activity".

Experts say that though this is a positive sign and will improve business sentiment, but cannot on its own be a sign of revival.

Kaushal Sampat, COO, Dun & Bradstreet India says While a 9% y-o-y growth in syndicated loans for Indian companies is certainly a positive sign, on its own, one cannot conclude this to be a signal of revival. Nonetheless, this year-to-date growth is not without merit, as it does indicate improvement in business sentiment.

This, along with other indications in the domestic economy, such as increase in rail freight loading during Mar-Apr 09, modest improvement in sectors such as cement, steel, consumer durables (auto) and capital goods could be considered as some incipient signs of stability entering the economy. Sustained revival in the economy will happen in H2, FY10 and all these factors will become the basis for that.

Moreover, despite a recent downturn in equity capital markets, follow-on share offerings have surged to over $100 billion mark globally. India's follow-on share offerings have already surpassed full year 2008, raising almost $2 billion in proceeds from five issues.

All Asian markets experienced an increase in follow-on offerings, except for Malaysia, with a decline of nearly 84%.

India?s syndicated loans up 9% in Jan-May - India Business - Business - The Times of India

 

[PeacefulIndian]

I don't think it is required to post each & every news from Economic/Business Times here. Only important ones would suffice.

 

[Nihat]

I don't think it is required to post each & every news from Economic/Business Times here. Only important ones would suffice.

Which is is exactly what I had mentioned some pages back but some just cannot get over their obsession with posting every slight bit of +ve news instead of giving a proper reflection of Indian Economy as it stands today.

 

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Govt to consider 17 new SEZ proposals tomorrow​

NEW DELHI: The government will tomorrow consider proposals for setting up 17 special economic zones (SEZs), including those of Larsen and Toubro,
Emaar MGF and Gulf Oil Corporation.

The Board of Approval (BoA), headed by Commerce Secretary G K Pillai, will also consider requests from realty major DLF for de-notification of its IT-ITeS SEZs in Gujarat, Haryana, West Bengal and Orissa.

"The developer (DLF) has requested for de-notification ... due to slowdown in the economy and liquidity crunch in the overall industry," the agenda document of the meeting said.

Scores of leading SEZ promoters, including Infosys Technologies, CMC Ltd, Hindalco Industries, NIIT Technologies, HCL Technologies, Orient Craft Infrastructure, L&T Phoenix Infoparks and K Raheja Corp, have sought time from the BoA, which is meeting here on June 2.

Larsen and Toubro has proposed to set up an IT SEZ in Mumbai, while Gulf Oil Corporation has moved application for a similar tax-free zone in Bangalore.

Other proposals for new SEZs include Emaar MGF's IT-related SEZ in Kerala.

Since 2006, when the SEZ Act was notified, formal approvals have been granted for setting up 568 SEZs, of which 315 have been notified.

Exports from SEZs grew 36 per cent to Rs 90,416 crore in 2008-09 from Rs 66,638 crore in the previous fiscal.

Govt to consider 17 new SEZ proposals tomorrow- Infrastructure-Economy-News-The Economic Times

 

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Indian ADRs gain more than $20 bn in May​

NEW YORK: Riding the wave of optimism over a stable Indian government and positive global cues, Indian companies trading on American bourses saw
their total market value zoom by more than $ 20 billion in the month of May.

The market capitalisation of 16 Indian firms listed as American Depository Receipts soared by $20.41 billion, with private sector lender ICICI Bank and IT major Wipro together accounting for nearly half of the total gains.

With the general elections throwing a massive mandate for the Congress-led coalition in India, investors anticipate the reforms process to gain momentum. Moreover, in May, the US market was mostly in the positive territory amid a clutch of encouraging data including those from the stress tests.

Among the 16 companies trading on the New York Stock Exchange and the Nasdaq, ICICI Bank's valuation jumped as much as $5.78 billion.

The market value of Wipro climbed $3.72 billion in May.

Another major gainer was leading copper producer Sterlite Industries whose valuation went up as much as $3.34 billion.

The US benchmark index Dow Jones Industrial Average (DJIA) gained about four per cent in the last one month.

Private sector lender HDFC Bank and IT bellwether Infosys Technologies too witnessed significant increase in their respective market capitalisation.

HDFC Bank valuation went up by $3.1 billion, while the market capitalisation of Infosys surged $2.42 billion.

In addition, auto maker Tata Motors' market capitalisation grew by $926 million in May, while that of telecom major Mahanagar Telephone Nigam Ltd rose by $465 million.

However, during the month of May, telecom major Tata Communications Ltd ended as the lone loser. The company witnessed a value erosion of $541 million.

Meanwhile, pharma major Dr Reddy's Laboratories, BPO firm Genpact and IT major Patni Computer System saw their respective valuations jump by $420 million, $281 million and $169 million dollars, respectively.

Outsourcing firms- WNS and EXLServices, internet entities- Rediff.com and Sify Technologies and Satyam Computer Services witnessed their valuations rise in the range of $nine million to $111 million.

Indian ADRs gain more than $20 bn in May- Market News-Stocks-Markets-The Economic Times

 

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India Inc tunes into FM to play those wishes​

2 Jun 2009, 0233 hrs IST

NEW DELHI: Captains of Indian industry met finance minister Pranab Mukherjee seeking interest rate cuts, simplifying tax structure, measures to
stimulate investment across sectors, besides incentives for exporters and small and medium enterprises.

Though the finance minister did not give any assurance, he conveyed to the industry that times are tough. The meeting that lasted for more than two hours was attended by the heads of industry associations CII, Ficci and Assocham besides industrialists like Bharti chairman Sunil Mittal, Videocon chairman Venugopal Dhoot, Raymond India CMD Gautam Singhania, Larsen & Toubro chairman AM Naik, Mahindra & Mahindra chairman Anand Mahindra and others.

Indeed, Corporate India is seeking some bold measures from the forthcoming budget to revive demand and put the economy back on track. "More stimulus should be given to foreign direct investment into India with special focus on increasing spend on infrastructure," said Bharti Group chairman Sunil Mittal.

Industry association CII has suggested that besides bringing down the fiscal deficit from the current 8% of GDP to 4%, the government should also increase the infrastructure spending from the current 4% of GDP to 11% by 2012. The chamber also said the forthcoming budget should be an investment-led budget.

Says L&T chairman AM Naik, "Long-term interest rate on infrastructure projects should not be more than 7-8% and income from projects located abroad should be tax exempted. Depreciation should be brought up to 25% and multilevel dividend tax should removed."

Ficci's recommendations too were focused on restoring the GDP to the 9% level, ensuring national security and improving governance.

The chamber's president Harsh Pati Singhania said measures such as lowering lending interest rates to 8-10% and introducing a stabilised SEZ policy are imperative for growth.

India Inc tunes into FM to play those wishes- Indicators-Economy-News-The Economic Times

 

[sob]

This is not a good news for the Indian economy. It will have an impact in the coming months. Stock markets have still not factored this in their euphoric rise.

Exports fall for seventh consecutive month

India’s merchandise exports declined for the seventh month in a row in April on weak demand from developed countries, where consumers and businesses are cutting spending in the midst of one of the worst recessions ever.
The ministry of commerce and industry said on Monday that exports in April fell by 33.2% on an annual basis to $10.7 billion (Rs50,290 crore today). They had dropped 33% in March as well.

Exports contribute to 16% of India’s gross domestic product, low in comparison with other regional economies such as China.

Such a low dependence on foreign demand is one reason why India’s economy could be stabilizing earlier than more export-oriented economies.

The government had said on Friday that output grew 5.8% in the fourth quarter of 2009-10 and 6.7% for the entire fiscal year, beating most estimates.

Imports fell faster than exports in April, by 36.6%, raising hopes that India’s trade deficit will be contained and add strength to the rupee.

Imports also declined for the sixth successive month in April by 36.6% to $15.7 billion.While oil imports fell by 58.5% to $3.6 billion due to lower crude oil prices, non-oil imports declined 24.6% to $12.1 billion as a slower economy lowered domestic demand for industrial inputs and machines for new factories.

India’s new commerce and industry minister Anand Sharma, after taking charge on Friday, had said he expects export growth to be flat this fiscal year, which he described as an achievement given that global trade is projected to contract by 9-11% in 2009.

Sharma also said more incentives for exporters will be announced in the Union budget that is expected in July and the foreign trade policy scheduled for August.

The decline in exports is likely to continue until September, India’s trade secretary Gopal K. Pillai had said on 13 April. Falling overseas sales may cost India about 10 million jobs, according to estimates from the Federation of Indian Export Organisations (Fieo), a lobby group.

“The April foreign trade data serves as a painful reminder that the global turmoil is likely still hurting the Indian economy.

With major economic powers such as the US and Europe still deep in recession, international trade remains subdued.

It is difficult for India to find export markets, as only a handful of economies around the world manage to expand during the difficult times. An annual contraction in exports is inevitable for India,” said Sherman Chan, economist with Moody’s Economy.com.

The trade deficit in April increased to $5 billion compared with $4 billion in March, even though it is far lower than the peak of $13 billion in August.

Exports fall for seventh month on weak demand

 

[PeacefulIndian]

Which is is exactly what I had mentioned some pages back but some just cannot get over their obsession with posting every slight bit of +ve news instead of giving a proper reflection of Indian Economy as it stands today.

I agree. And strangely, it still has not stopped even after our discussion.

 

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Govt approves 10 new SEZs; gives time to Ambani, Rahejas

NEW DELHI: The government on Tuesday approved 10 Special Economic Zones and allowed one-year extension to four projects, including Reliance
Industries' Mukesh Ambani- promoted Rewas Ports for land acquisition.

The Board of Approval (BoA) in the Commerce Ministry gave formal approvals to eight proposals, including those of Gulf Oil Corporation, Emmar MGF and Larsen and Toubro. Two other proposals were also given 'in-principle' approvals.

The board also allowed DLF to withdraw four of its IT/ITeS tax-free enclaves, asking the realty major to refund Rs 6-7 crore worth of fiscal sops the company would have availed of. DLF had cited economic downturn as reasons for seeking withdrawal.

Four developers, including Ambani-promoted Rewas Ports in Raigad, Maharashtra, and K Raheja group have been allowed extension of in-principle approval by one year. These projects have not been able to acquire the required land.

However, the BoA outrightly rejected the proposals of Videocon Realty and Writers and Publishers for SEZs in Indore, on the ground that the promoters have not acquired "even an inch" of land.

"We want serious players and don't (want) to spoil the SEZ policy," Additional Secretary in the Commerce Ministry D K Mittal said after the BoA meeting.

Govt approves 10 new SEZs; gives time to Ambani, Rahejas- Infrastructure-Economy-News-The Economic Times

 

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Indian exports dive for seventh month​

NEW DELHI: India's exports of jewelry, garments and other goods slid 33 per cent in April, shrinking for the seventh straight month, hit by a demand
slump in major global markets, official data showed Monday.

Exports slumped to 10.74 billion dollars in April from 16.08 billion dollars a year ago as the global appetite for made-in-India goods contracted.

The figures came days after the newly re-elected Congress-led government promised more measures to help exporters hard-hit by the recession in developed economies.

But exports account for just 15 per cent of gross domestic product in India, shielding the economy from the impact of the worst global downturn since the 1930s Great Depression.

The country logged unexpectedly strong 5.8 per cent growth in the final quarter to March 2009, fuelled by aggressive rate cuts and fiscal stimulus measures, prompting analysts to say India's economy was on the upturn.

Imports slumped in April for the third straight month, falling 36.6 per cent to 15.8 billion, reflecting a tumble in world oil prices and easing demand.

The trade deficit for April was five billion dollars, down from 8.7 billion dollars a year ago.

After posting blistering export growth of more than 30 per cent in the first six months of the financial year to March 2009, overseas sales began declining in October when the global financial crisis began to bite.

The government has forecast more bad news in the months ahead for export demand for Indian goods like textiles, jewelry and handicrafts.

It has forecast exports will keep falling until at least September and the turnaround will be only gradual as the world economy recovers.

For the last fiscal year, exports grew by just 3.4 per cent to 168.70 billion dollars. The new trade minister, Anand Sharma, said last Friday the government aims to achieve the same target in this fiscal year.

Sharma pledged the government, which has already raised subsidies for exporters, would announce more trade-boosting measures, including a reduction in transaction costs, in the coming months.

Indian exports dive for seventh month- Foreign Trade-Economy-News-The Economic Times

 

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Core sector growth doubles to 4.3%​

3 Jun 2009, 0027 hrs IST

NEW DELHI: As a clear sign of economic recovery, the growth rate of core sectors like cement, finished steel, coal and electricity nearly doubled
to 4.3% during April 2009 as against 2.3% in the same period last year, when the economy was booming and was not affected by the global slowdown.

"April figures are very encouraging. But we are still in the recovery stage,'' said Saumitra Chaudhuri, member of the PM's Economic Advisory Council.

The output of six core sectors has over 26% weight in the Index of Industrial Production. The recovery was noticed in coal, cement, electricity and steel sectors. ‘‘This is certainly positive news," Chaudhuri said, adding that the performance of the cement sector indicates that construction sector is performing well. The output of cement in April went up by 11.7% compared to 6.9% during the corresponding month last fiscal.

Commenting on the core sector's performance during April, planning commission member Anwarul Hoda said, ‘‘We seem to be going out of economic slowdown.''

Regarding 1.6% growth in the finished output of steel as against a contraction by 0.6% in the same period last year, Chaudhuri said, ‘‘Growth in steel compared to the second half of the last year is good. This is a passing phase and some improvement is still needed."

Coal production registered a growth rate of 13.2% during the month as compared to 10.4% in the corresponding period last year. Similarly, electricity generation increased by 6% in April'09 against 1.4%.

Crude oil production, however, continued to remain in the negative zone as it dipped by 3.1% in April from 1% a year ago.

Core sector growth doubles to 4.3% - India Business - Business - The Times of India