Indian Economy-News & Updates

[lepziboy]

Govt committed to achieve 2011-12 fiscal targets: Pranab

NEW DELHI: Buoyed by better-than-expected performance on government finances' front in 2010-11, the Centre on Thursday said it will keep a tab on public expenditure to ensure that Budget targets for this fiscal too are achieved.

"Efforts to get the economy on the path of fiscal prudence are on track... The government is committed to achieve the fiscal targets," an official statement quoting finance minister Pranab Mukherjee at a meeting of Consultative Committee held on Wednesday said.

He further said that to ensure that scarce resources of the country are productively deployed, "it is extremely important to measure outcomes."

In the Budget for 2011-12, the government had set fiscal deficit target at 4.6 per cent of the GDP and the revenue deficit target at around 3 per cent.

Now the government has also started providing, along with the Budget and revised estimate of current year and Budget estimates of the ensuing year, the details of actual expenditure incurred on each scheme "for a better analysis of the budgetary provisions and the trend in expenditure".

Mukherjee said the government has been able to contain the fiscal deficit and revenue deficit well within the revised estimates in 2010-11.

It has been "possible due to higher tax collections as compared to revised estimates, higher receipts from non-tax sources and non-debt capital sources and savings under plan expenditure of government".

only .1% lower?Fiscal deficit was already 4.7% last year.

 

[cuncon1202]

oh well.
It is nice sound! I hope Indian Economy develop more!

 

[keeninterest]

only .1% lower?Fiscal deficit was already 4.7% last year.

there are various factors which helped pug the gap of fiscal deficit (fd) from 6.6% in 2009-10 to 4.7% in 2010-11, which by the way was no mere feet achieved when the best estimate for fiscal 2010-11 was 5.5%, one of the more important role players was the bidding of 3G which brought in significant revenue, which earned the state exchequer Rs 67,719crs (15Billion USD), along with disinvestment in PSUs, but a similar role out of a service whose license fee will earn them similar revenue this time round is not in the horizon, so that remains a handicap when compared to last fiscal.


i will explain the same in a detail:



the fd in 2010-11 was at 4.7%, valued at 81.9B USD or rs.3,69,000crs with exchange rate at rs.45.05/usd.

XE.com - India's fiscal deficit at $81.9 bln in 2010/11 - govt

indian govt estimates the gdp to grow between 8-9% this fiscal with inflation between 5-6% and fd at 4.6%, which means nominal gdp for fiscal 11-12 is expected between rs89,00,000-90,00,000crs with fd at around rs4,00,000-4,100,000crs.

which means with inflation rate at 5-6%, the cost escalation remains between rs.31,000-32,000crores and all this being achieved without the support of those rs.67,719crs that came in handy in fiscal 10-11' but not to be expected in 11-12'. now if that same rs.71,782crs [rs67,719crs+5-6% (inflation rate)] were to be realised this fiscal as well, then the relative drop would have not been 0.1% but 1.1%, which would have brought down the over all fd to 3.6% and not the projected 4.6% or which also means the fd would then have been at rs3,30,000crs and not the projected rs4,00,000-4,100,000crs.

what this signifies is, there is better fiscal management expected from the government, which will show in better revenue generation by means of taxes and not as much from license distribution which is more of a one time phenomenon, lesser subsidies and the most importantly, lesser government expenditure on their wanted/unwanted expenses and all this further means, india's economic fundamentals are getting stronger,and the economy is getting more stable and as all this happens it is getting in shape to look after itself through its own means than look for more loans/grants to assist the economy, which showed in the financing of this year's budget when as a % of gdp the loans generated were less compared to previous fiscal, so it is better over all picture is seen and not just get taken away by figures which hardly tell what is really happening behind the scene.

 

[ramu]

India should bring the fiscal deficit to below 4% of GDP. 2015 sounds a good target year for under 4%...

 

[ramu]

A prosperous India is at pains to identify its poor for subsidies

NEW DELHI — Counting India’s soaring number of billionaires is fairly straightforward: 49 last year, according to Forbes. But deciding who is poor has set off a fierce debate and led some to ask: Is the government trying to lower the tally to reduce its welfare burden?

Ahead of a survey of India’s poorest people this month, economists, officials and activists are embroiled in a debate over how to define poverty, which will determine how this prospering economy redistributes its newfound wealth among the poor.

Later this year, India plans to begin depositing cash into the bank accounts of poor people instead of giving them subsidized fuel and fertilizer. The government is also writing a food guarantee bill that promises cheap grains for the poor in a country where 46 percent of children are considered malnourished.

Officials say such moves make identifying the poor all the more important, but some analysts say the prevalent definition could exclude too many.

Estimates of the number of poor in India have swung wildly in the past decade, from 280 million to more than 800 million, depending on how poverty is defined.

Advocates of economic reforms that began in 1991 say economic growth has lifted millions out of desperate poverty, but critics say the gap between rich and poor has widened.

India’s Planning Commission recently declared that poverty declined from 37 percent in 2005 to 32 percent of India’s 1.2 billion people last year. At current Indian prices, the commission defines the urban poor as those who spend 65 to 75 cents a day or less and rural poor as those who spend 50 to 55 cents daily or less.

But many Indians say that is too low and that millions of poor people are excluded from government benefits, including inexpensive food, cooking fuel, low-cost housing and health care. Six Indian states have disputed the central government’s poverty estimates, saying millions more should be included.

The Supreme Court has asked the Planning Commission to explain the basis of its poverty number and why several state governments are disputing it.

“We used to look at intake of calories per person to define the poor. Now we look at income and consumption to set the poverty line,” said Pronab Sen, a senior adviser to the Planning Commission. “But some states want a multi-dimensional approach to poverty that includes questions like, do you send your children to school, do you own land, do you belong to a lower caste, do you have access to water and toilet?”

At the center of the debate are people like Ramvati Singh, a mother of six who earns about $1.50 a day as a manual laborer on construction sites in the capital. She cannot afford to send her children to school, she said, and rising prices are making it difficult for her to buy enough food.

But according to the Indian government, Singh is not poor because she earns more than the official poverty line.

“We give our blood and sweat to feed the family every day,” Singh said, sitting at her wood stove kneading dough. “Someone come and ask me what poverty is. I experience it every day.”

About 100 activists recently protested outside the Planning Commission office in New Delhi, carrying boxes of groceries to demonstrate what 75 cents can buy in the capital. Each box contained a potato, an onion, a pencil, a bus ticket and the cheapest variety of rice.

“We wanted to let the officials know that this amount gets you precious little. There is rampant fraud in who gets into the official poverty list. Millions of poor do not have a voice and do not manage to get listed,” said Nikhil Dey, one of the protesters and a member of a farm workers group.

But analysts say that differing political ideologies have prevented Indians from agreeing on the number of poor.

“India must be the only economy in the world where the government spends over $116 billion to alleviate poverty without clarity on the magnitude of poverty,” said Shankkar Aiyar, a newspaper columnist who writes on economy and governance.

“Poverty figures in India are trapped between competing compulsions — that economic liberalization has reduced poverty, and the politicians’ need to extract election benefits by exaggerating the poverty numbers and offering more subsidies.”

The National Advisory Council, a government-appointed watchdog, argues that the government should extend social support to all citizens because the Indian economy can now afford it.

But the impending cash transfer system, Sen said, makes precise targeting of the poor crucial.

“We have finite public resources. We can only give cash handouts to the real, unambiguous poor. If we cast the net wider, then the whole subsidy program becomes ineffective,” Sen said.

 

[Chow chow]

India's forex reserves soar $2.69 bn to $312.90 bn

MUMBAI: India's foreign exchange (forex) reserves soared by $2.69 billion to $312.90 billion for the week ended June 3 on the back of a sharp increase in the value of gold reserves and foreign currency assets.

This is the third consecutive week that the country's forex reserves kitty has seen a jump. The country's foreign exchange reserves have increased by a whopping $5.41 billing in the last three reporting weeks.

The forex reserves had registered a gain of $1.68 billion and $1.04 billion, respectively, in the previous two weeks.

The foreign currency assets, the biggest component of the forex reserves kitty, increased by $2.03 billion to $280.91 billion during the week under review, according to the weekly statistical supplement of the Reserve Bank of India (RBI).

The foreign currency assets expressed in US dollar terms include the effect of appreciation or depreciation of non-US currencies such as British pound sterling, euro and Japanese yen held in reserves.

After remaining unchanged during the last several weeks, the value of gold reserves soared by $601 million to $24.39 billion.

All the components of the foreign exchange reserve kitty registered a gain. The value of special drawing rights (SDRs) increased by $32 million to $4.62 billion and reserves with the International Monetary Fund rose by $21 million to $2.98 billion.

India's forex reserves soar $2.69 bn to $312.90 bn - The Economic Times

 

[ramu]

India should bring the fiscal deficit to below 4% of GDP. 2015 sounds a good target year for under 4%...

According to news reports, the fiscal deficit will be reigned in and would be less than 3.6% by 2015. That is just too good to be true.

 

[mastaan]

According to news reports, the fiscal deficit will be reigned in and would be less than 3.6% by 2015. That is just too good to be true.

I seriously doubt it mate... reducing it from current 4.6-4.8%, in an economy which will grow at 8-11% in the next 4 years (and thus will need significant cap-ex investments and a much higher GDP number), doesn't look possible or realistic... even with listing of govt companies, we'd be barely able to manage avoiding it grow over 5%... bring it below 4.5, would need privatization of Indian Railways kind of projects and you and I know that that ain't happening...

BTW, 4.5% level is still super sexy if we can manage a 9% run rate a less than 6% inflation... We'd be much closer to 2 trillion in nominal terms (and 6 trillion in PPP terms) at the end of it and we can may be consolidate a bit then... Till then, i am 'tally ho!' and lovin this ride of life...

 

[ramu]

I seriously doubt it mate... reducing it from current 4.6-4.8%, in an economy which will grow at 8-11% in the next 4 years (and thus will need significant cap-ex investments and a much higher GDP number), doesn't look possible or realistic... even with listing of govt companies, we'd be barely able to manage avoiding it grow over 5%... bring it below 4.5, would need privatization of Indian Railways kind of projects and you and I know that that ain't happening...

BTW, 4.5% level is still super sexy if we can manage a 9% run rate a less than 6% inflation... We'd be much closer to 2 trillion in nominal terms (and 6 trillion in PPP terms) at the end of it and we can may be consolidate a bit then... Till then, i am 'tally ho!' and lovin this ride of life...

The Government must cut its fiscal deficit to 3% of the GDP by the end of fiscal year 2013-14 and eliminate its revenue deficit in 2014-15, according to the key recommendations of the 13th Finance Commission. The fiscal deficit is estimated at 5.7% in the year ending on March 2011, and will fall further to 4.8% in the year 2011-12, a 13th Finance Commission said. The report of the 13th Finance Commission, said that the fiscal deficit should drop to 4.2% in 2012-13 and to 3% in 2013-14. Finance Minister Pranab Mukherjee said that the Government has accepted all major suggestions of the 13th Finance Commission. The Centre must cap its total debt at 68% of the GDP by the end of financial year 2014-15, the report of the 13th Finance Commission stated.

Report of the 13th Finance Commission (2010-2015)

 

[mastaan]

The Government must cut its fiscal deficit to 3% of the GDP by the end of fiscal year 2013-14 and eliminate its revenue deficit in 2014-15, according to the key recommendations of the 13th Finance Commission. The fiscal deficit is estimated at 5.7% in the year ending on March 2011, and will fall further to 4.8% in the year 2011-12, a 13th Finance Commission said. The report of the 13th Finance Commission, said that the fiscal deficit should drop to 4.2% in 2012-13 and to 3% in 2013-14. Finance Minister Pranab Mukherjee said that the Government has accepted all major suggestions of the 13th Finance Commission. The Centre must cap its total debt at 68% of the GDP by the end of financial year 2014-15, the report of the 13th Finance Commission stated.

Report of the 13th Finance Commission (2010-2015)

But what you have mentioned is the 'recommendation' of the planning commission.. Ask for their assumption on Inflation and growth rate elements and you will find the first gap there... and second, if you look at any of the last '5 year plans', we have always slipped on consolidated financial efficiency metrics and growth plans like target MW installed or KM of road built or fiscal deficit targets... So, yes... 3% of lesser is advisable... My contest is that it is not doable without killing growth rate (and the problems and opportunities that come with it)

 

[ramu]

But what you have mentioned is the 'recommendation' of the planning commission.. Ask for their assumption on Inflation and growth rate elements and you will find the first gap there... and second, if you look at any of the last '5 year plans', we have always slipped on consolidated financial efficiency metrics and growth plans like target MW installed or KM of road built or fiscal deficit targets... So, yes... 3% of lesser is advisable... My contest is that it is not doable without killing growth rate (and the problems and opportunities that come with it)

You disagreed with 3.6 % now you are talking of 3 %. Anyways, the lesser it is the better it will be. The last recommendation was 4.6% and we achived 4.7%. So we are not too far off the mark. Also, the tax recovered every year has met the target and in fact out done the estimates. So the other estimates we have not met should be viewed in conjunction with those that directly affect fiscal situation.

Not building roads as planned has nothing to do with fiscal situation in the short term.

 

[Varad]

India's forex reserves soar $2.69 bn to $312.90 bn

MUMBAI: India's foreign exchange (forex) reserves soared by $2.69 billion to $312.90 billion for the week ended June 3 on the back of a sharp increase in the value of gold reserves and foreign currency assets.

This is the third consecutive week that the country's forex reserves kitty has seen a jump. The country's foreign exchange reserves have increased by a whopping $5.41 billing in the last three reporting weeks.

The forex reserves had registered a gain of $1.68 billion and $1.04 billion, respectively, in the previous two weeks.

The foreign currency assets, the biggest component of the forex reserves kitty, increased by $2.03 billion to $280.91 billion during the week under review, according to the weekly statistical supplement of the Reserve Bank of India (RBI).

The foreign currency assets expressed in US dollar terms include the effect of appreciation or depreciation of non-US currencies such as British pound sterling, euro and Japanese yen held in reserves.

After remaining unchanged during the last several weeks, the value of gold reserves soared by $601 million to $24.39 billion.

All the components of the foreign exchange reserve kitty registered a gain. The value of special drawing rights (SDRs) increased by $32 million to $4.62 billion and reserves with the International Monetary Fund rose by $21 million to $2.98 billion.

India's forex reserves soar $2.69 bn to $312.90 bn - The Economic Times

 

[mastaan]

You disagreed with 3.6 % now you are talking of 3 %. Anyways, the lesser it is the better it will be. The last recommendation was 4.6% and we achived 4.7%. So we are not too far off the mark. Also, the tax recovered every year has met the target and in fact out done the estimates. So the other estimates we have not met should be viewed in conjunction with those that directly affect fiscal situation.

Not building roads as planned has nothing to do with fiscal situation in the short term.

I think, I did not communicate my point clearly... What I said was 3% (if it is recommended) is more of an 'ideal state advisable figure'... It is practically not achievable.. is my concern... and thus my belief that we not not unncesessarily be worried about the number from 3.5% to 5.3%, specially in the next 5 years or so...

Indeed direct tax collection has been stupendous and it is expected to cintinue, but that is not what made the dent... We were on our way to a figure above 5%... But, the huge swing last year (to below 5% deficit) was predominantly an over-recovery (if you may) on account of 3G spectrum sales (by about $7-8Bn above the expected govt estimate in budget) and the decontrolled prices of Petrol also helped a big way in improving (by rolling out lesser subsidies, some of the related unwanted expenses were avoided) both the fiscal and current account deficits... But that can not be assumed to be the 'trend' as windfall profits like '3G' licensing happen only once in 5 years... and here is my humble submission why I believe in what I said...

To pump out a >8% growth rate, you got to invest in lots of sectors and infrastructure and for that you have to take loans or invite private Capital and in such cases an 8% growth will not lead to a similar jump in tax revenues... Because (a) Infrastructure businesses (even with FDI) take more than 3-4 years to turn positive (let alone paying taxes) - e.g. Delhi Airport will take around 7-10 years to make its first profit (b) The depreciation is higher in the first few years (in cases of new investments into sectors, where govt wants focus) and to add to it, sector specific tax holidays also help postpone the tax earning potential... So, investment is far far greater than return (and thus taxes) in the first 3-4 years... On top of it, the reducing value of dollar makes export less attractive and reduce the inflow of solid direct income (as against FII money, which can vanish over night)

Another important factor is that the controlled prices of Diesel and LPG are creating a bigger dent (a factor that did not exist for most of the last year due to lower crude prices, which have started increasing again)... Higher commodity (and agri) prices and increasing wages will also hurt EBITDA margins and that will add further pressures... In addition, the massive defence purchases will also have cost escalations that have not been budgeted and that will add to the outflow (as against no new inflows).... And, mind you, all this while the size of GDP is increasing like crazy and there will be no major returns in absolute short term and that 'WILL' push the deficit numbers higher...

What I am trying to imply is that, India is in an 'investment phase' and if you open the corporate histories around the world, you wil see that the 'leverage' or 'loans vs revenue ratios' or what you refer to as 'deficits', always jump up in these phases and are not necessarily bad... The only concern is that lending should not be made to stupid businesses or baseless business plans (like the credit growth phase in US or what we saw sometime back in China real estate market) and if you see the last 2 years, Indian banks have done all they can to ensure that only reliable parties get loans and that is our biggest strength... Our government's growth centric and yet smartly conservative mindset... This is not a political stand I am taking, but only some basic economic realities for a growth economy...

I am not against what you said... I am just saying that some of that is practically not achievable and yet, there is no major reason to loose sleep over it...

 

[jha]

Q&A with Wahidullah Shahrani, Afghanistan’s Minister for Mines: "India will consume most commodities by 2030" "

Q. The bids will encompass far more than just the extraction of iron ore from Hajigak?

Besides the extraction of ore, the bids will include setting up a steel production plant utilising the nearby high-grade coking coal deposits; [exploitation of] the high-quality chromite deposits in the same package; job creation in Afghanistan; infrastructure development including railroad and power; and the evacuation of ore and steel to neighbouring countries for the entire duration of engagement, which should be 35-40 years. Also, other benefits like paving the way for establishing a cement plant… [there is] strong potential demand for cement in Afghanistan as a post-conflict country where construction is the largest sector.

Q. India has offered to set up a school of mines in Kabul?

I made the request when I visited Delhi [last year]. And, when Dr Manmohan Singh visited Kabul last month, he confirmed that the GoI would support the National Institute of Mining as part of its aid package to Afghanistan…. The Indian School of Mines (ISM), Dhanbad, is assisting us in developing the curriculum. Our focus will be on metals, coal, mineral economics, mineral law, environmental and health issues, contract management etc. It will be a comprehensive mining institute. Two faculty groups have already gone for training to ISM Dhanbad.

Q. Does all this place India in an advantageous position in bidding for Afghan mines like Hajigak?

India is in a very advantageous position. Besides the traditional and historical linkages between the two countries and their strategic relationship, India has become the fourth largest economy in the world and, by 2030, India will become the world’s largest consumer of commodities…. We have a special feeling for the people of India; their investment will be culturally comfortable. Given the glorious future of the Indian economy, investment in Afghanistan’s commodities will be very much in India’s benefit. And finally, India has emerged as a major contributor towards Afghanistan’s development with an aid contribution of around $2 billion. We would welcome large-scale investment by India into Afghanistan.

Broadsword: Q&A with Wahidullah Shahrani, Afghanistan’s Minister for Mines: "India will consume most commodities by 2030" "

 

[2012]

India Telecom Industry To Touch Revenues Of Rs.3,77,683 Crore Between 2010 And 2014


The India telecom industry will grow at a compound annual growth rate (CAGR) of 15.8 per cent between 2010 and 2014 and will touch revenues of Rs.3,77,683 Crore ($ 82 billion) according to a research done by CyberMedia Research.

The India telecom services and mobile handsets market will grow at 16.7 per cent in 2012 (over 2011) and will touch revenues of Rs.2,88,832 Crore ($ 63 billion) out of which, the telecom services, which includes mobile and fixed line services will contribute Rs.2,05,454 Crore ($ 45 billion) and the India mobile handsets market which includes feature phones and smart phones will contribute Rs.83,377 Crore ($ 18 billion). The latter will grow at over 30 per cent during 2012 (over 2011).


Anirban Banerjee, Associate Vice President, CyberMedia Research, said “The telecoms growth story will be a function of the enhanced demand for high speed broadband and data services from both enterprises and consumers, as 3G and BWA/WiMax services are rolled out by various operators to cover an increasing number of cities and towns”

Here is a table of the India telecom services and products sector, 2010-2014



The key factors behind the growth in the telecom services segments would be the launch and roll-out of 3G and BWA / WiMax / LTE services and the resulting growth in usage of high speed broadband, VAS and data services, although the broadband content will still be in the early stages of development in 2011. Other high growth telecom services areas will include IP-TV, IP-VPN, VoIP and Mobile VAS. Additionally the India telecom products (mobile handsets) segment will witness a high growth rate of 26.2 per cent CAGR over the period 2010-2014 and will touch Rs 1,28,729 Crore in 2014.

The India domestic mobile handsets market will see an increase of more than 150 per cent in terms of the value of featurephones and smartphones shipped. It will increase from Rs.50,714 Crore in 2010 to Rs.1,28,729 Crore in 2014.

The smartphones market in India is expected grow to over 10 million units in 2011 from 6 million units in 2010, a 66.7 per cent increase. The Android operating system will be the most popular mobile OS and 12 per cent of all smartphones shipped in India during 2011 are expected to be based on the Android platform. Additionally Due to the increase in popularity of WiMax / LTE services, content creation and mobile application development see a rapid increase.

“Going forward these devices (smartphones) will become as powerful as present day laptops”, said Naveen Mishra, Lead Analyst, Telecoms Practice, CyberMedia Research.

As per the current pricing of tablets from companies like Samsung, Apple and Olive, over 1,00,000 Tablets will be shipped in 2011 alone, but if a tablet for the masses is introduced at a price lower than Rs.10,000 by any company (like Reliance Infotel), then it could become a game changer.

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