Tuesday, June 30, 2009
GDP to grow 7% if monsoon doesn’t fail
GDP to grow 7% if monsoon doesn’t fail
The Times of India, June 30, 2009, Page 20
New Delhi: The chairman of PM's Economic Advisory Council, Suresh Tendulkar, said on Monday the economy would expand by at least 7% during the current financial year, provided the monsoon does not fail. He ruled out the need for pressing the panic button at the moment.
Talking to news persons on the sidelines of a function to observe the third Statistics Day here, Tendulkar said, "If the monsoon does not fail, the economy will grow by at least 7% (during 2009-10). Asked about the impact of delayed monsoon on agriculture and the economy, Tendulkar said, "it is too early to press the panic button." Rainfall, according to latest official estimates, is likely to be only 93% of the long-period average.
As regards inflation, Tendulkar said, it is likely to remain between 5-6% by the end of current financial year. "The Wholesale Price Index would still be under 5-6%, if monsoon are all right. If monsoon fails, it will be little more", he added. Tendulkar also expressed confidence that the economy, which has been reeling under the impact of the global financial meltdown, will recover by September.
Having grown by about 9% continuously for three years, the growth rate slipped to 6.7% during 2008-09 on account of meltdown. Noting that high interest rate was a matter of concern, Tendulkar said, it might not be possible for banks to lower lending rates in absence of reduction in deposit rates. He added that RBI's policy rate cuts was getting reflected on lending rates. AGENCIES
‘WPI unsatisfactory inflation indicator’
New Delhi: Wholesale Price Index (WPI), currently used to measure inflation, is an "unsatisfactory" indicator of price movement and is eroding the credibility of government data in the minds of people, said the PM's Economic Advisory Council chairman, Suresh Tendulkar
"It (WPI) is an unsatisfactory indicator of rate of change of prices of consumer goods with which our everyday experience of inflation is associated", he said while speaking at the third Statistics Day here on Monday. AGENCIES
Kelkar for GST on realty, construction & railways
Kelkar for GST on realty, construction & railways
The Financial Express, June 30, 2009, Page 1
Economy Bureau, New Delhi
As the Centre and states work out the modalities of the goods & services tax (GST), the Thirteenth Finance Commission has proposed to bring construction, real estate and railways under the GST net. Including these sectors under the GST ambit would help widen the tax base and prevent tax evasion, said Vijay Kelkar, the Commission’s chairman and the architect of GST in India, on Monday.
The Commission also offered a compensation mechanism to states for any revenue loss from GST implementation.
Addressing a Assocham conference, Kelkar said, “The construction sector is a significant contributor to the national economy. Housing expenditure dominates personal consumption expenditure. The present piece-meal taxation of this sector encourages perverse incentives.”
Admitting that the inclusion of these sectors does not figure in the ongoing discussions on GST, Kelkar cited the potential long-term benefits of their inclusion to the economy ‘either immediately or during a subsequent phase.’
“Raw material is charged Cenvat, the works contract is charged VAT and stamp duty is levied on the sale. With no provision of input tax credit in place, there is little incentive to record such transactions either at the construction stage or at the sale stage at their correct value. This leads to substantial loss of tax revenue and fuels the parallel economy,” he said.
Similarly, bringing railways under GST would bring it on a level field with road and air cargo transportation and help track the movement of goods across state. Kelkar said. “The railways themselves will benefit from this by availing of input tax credit on the significant purchases made by them,” he pointed out.
Tax experts echoed Kelkar’s views although they said this should be looked at in the long term.
“The present GST regime will be very basic where Cenvat and state VAT are merged. These services can be included in the long term, especially if we move from a dual GST to a state GST,” said Mahesh Purohit, director, Foundation for Public Economics & Policy Research.
The Commission is reviewing the planned structure of the tax to assess its impact on the Centre and states’ tax kitty. It will come out with a new basis for devolution of taxes between the two.
In a bid to placate the concerns of states on possible revenue losses under GST, Kelkar said, “It is possible that some states may want assurances that existing revenues will be protected when they implement GST. The Commission is willing to consider providing for compensation in order to advance the implementation of a ‘flawless’ GST.”
Urban mission to add 28 cities, seeks Rs 1.5 lakh crore funding
Urban mission to add 28 cities, seeks Rs 1.5 lakh crore funding
The Financial Express, June 30, 2009, Page 3
fe Bureau, New Delhi
The government is working on the expansion of Jawaharlal Nehru National Urban Renewal Mission (JNNURM) by including cities having a population of at least 5 lakh, thus expanding into 28 more cities, and is seeking to raise earmarked funds from Rs 1,00,000 crore to Rs 1,50,000 crore.
JNNURM is the flagship scheme of the ministry of urban development. It currently covers 65 cities, each having a population of at least 10 lakh people and Rs 1,00,000 crore are to be raised by the Centre, state governments and urban local bodies.
“We have already sanctioned schemes worth Rs 95,385 crore. Today, we have the problem of plentiful of demand. I am talking to the finance minister and it would be our endeavour to see that the amount under the mission is raised by Rs 50,000 crore,” urban development minister S Jaipal Reddy told reporters highlighting the key features of the 100-day agenda of his ministry. The new fund is planned to be raised equally by the union government and states.
“Twenty eight more cities would be included in the mission, taking the total number of covered cities to 93,” he added. The government is also looking at additional allocation under its Urban Infrastructure Development Scheme in Small and Medium Towns as the present funds of Rs 11,400 crore are “nearly exhausted”.
As per the memoranda of undertaking signed with the Centre, states that benefit from JNNURM have to undertake reforms, including the repeal of Urban Land Ceiling Act, rationalisation of stamp duty and tax system. While some states have already implemented these reforms, others including Punjab and Rajasthan have not. Warning the erring states and local bodies, Reddy said, “If the states or local bodies don’t undertake the necessary reforms, we will reduce the flow of funds to them.”
In order to create a better pricing mechanism and settle disputes in the housing sector, the government is also working on setting up a regulator. “We will work on the shape of this regulator for Delhi in the first 100 days. The regulator in Delhi would act as the model for other states,” Reddy said. For this, the government would take up the Real Estate Management (Regulation & Control) Bill for the National Capital Territory (NCT) of Delhi.
Concentrating on the economically weaker section of the society and lower income groups, the Delhi Development Authority would build 40,000 flats, for which “tender documents have already been made ready,” he said. About 10,000 flats would be built for the middle-income group and nearly 15,000 under-construction houses would be made available by 2011.
The government would make “focused efforts” to finalise the zonal development plans of Delhi, which would ensure private participation in land development as per the notified Delhi Master Plan 2021.
Aimed at improving the transport system in cities, the Centre has proposed 134 kms of metro line at the total cost of Rs 30,418 crore in Bangalore, Kolkata, Chennai and Mumbai, the minister said. The NCT of Delhi would be connected to Delhi Metro with Noida link getting commissioned in August this year and the Gurgaon line becoming operational in January 2010, he added. The government would also procure over 15,000 buses for the rapid bus transit system in 61 cities by December 2009, Reddy said.
Punjab yet to avail Rs 470-cr JNNURM funds
Punjab yet to avail Rs 470-cr JNNURM funds
The Financial Express, June 30, 2009, Page 16
Punjab has "failed miserably" to take benefit of the Centre's flagship Jawahar Lal Nehru National Urban Renewal Mission (JNNURM) scheme, as it is yet to avail Rs 470 crore against the seven-year allocation of Central assistance of Rs 538 crore, housing and urban poverty alleviation minister Kumari Selja alleged on Monday.
While neighbouring states of Haryana, Himachal Pradesh and even the Union Territory of Chandigarh have already availed their seven-year allocation commitment from the Centre, Punjab is "lagging behind", she told a press conference in Chandigarh.
"The Centre has no problem in releasing the funds, but it is entirely demand-based. If there is no demand from the state concerned, all we can do is to bring it to their notice, which we have been doing in Punjab's case," she said.
Terming JNNURM a great success, Selja said over 15 lakh houses are under construction for the urban poor under JNNURM, out of which one lakh have been built and about 4.5 lakh are being built. "There is a need to focus on urban housing programmes for the poor living in slums. The government proposes to introduce Rajiv Awas Yojana for slum dwellers and the urban poor on the lines of the Indira Awas Yojana for the rural poor. The schemes for affordable housing through partnership and the scheme for interest subsidy for urban housing would be dovetailed into the Rajiv Awas Yojana, which would extend support under JNNURM to states that are willing to assign property rights to people living in slum areas. This would help create a slum-free India in five years," she said.
Selja, who is also tourism minister, said both ministries under her have vast potential for employment generation and convergence between the two is under active consideration of the government. Selja said the thrust area for the government would be creation and improvement of tourism infrastructure, promotion and publicity of India as a preferred tourism destination overseas and promotion of domestic tourism.
She said the ministry is also planning to organise road shows in the north to woo private players for tourism development.
The Financial Express, June 30, 2009, Page 16
Punjab has "failed miserably" to take benefit of the Centre's flagship Jawahar Lal Nehru National Urban Renewal Mission (JNNURM) scheme, as it is yet to avail Rs 470 crore against the seven-year allocation of Central assistance of Rs 538 crore, housing and urban poverty alleviation minister Kumari Selja alleged on Monday.
While neighbouring states of Haryana, Himachal Pradesh and even the Union Territory of Chandigarh have already availed their seven-year allocation commitment from the Centre, Punjab is "lagging behind", she told a press conference in Chandigarh.
"The Centre has no problem in releasing the funds, but it is entirely demand-based. If there is no demand from the state concerned, all we can do is to bring it to their notice, which we have been doing in Punjab's case," she said.
Terming JNNURM a great success, Selja said over 15 lakh houses are under construction for the urban poor under JNNURM, out of which one lakh have been built and about 4.5 lakh are being built. "There is a need to focus on urban housing programmes for the poor living in slums. The government proposes to introduce Rajiv Awas Yojana for slum dwellers and the urban poor on the lines of the Indira Awas Yojana for the rural poor. The schemes for affordable housing through partnership and the scheme for interest subsidy for urban housing would be dovetailed into the Rajiv Awas Yojana, which would extend support under JNNURM to states that are willing to assign property rights to people living in slum areas. This would help create a slum-free India in five years," she said.
Selja, who is also tourism minister, said both ministries under her have vast potential for employment generation and convergence between the two is under active consideration of the government. Selja said the thrust area for the government would be creation and improvement of tourism infrastructure, promotion and publicity of India as a preferred tourism destination overseas and promotion of domestic tourism.
She said the ministry is also planning to organise road shows in the north to woo private players for tourism development.
Sobha mops up $130 m
Sobha mops up $130 m
The Economic Times, June 30, 2009, Page 6
Our Bureau BANGALORE
BANGALORE-based realty major Sobha Developers has attracted investor commitments for its $100-$130 million qualified institutional placement (QIP) issue. It is understood that the company has managed to raise the capital on day one itself from a dozen Indian and global institutional investors. The issue opened for subscription on Monday.
The QIP was priced at 209.40 per share. On BSE, the Sobha scrip was up 4.99% to close at Rs 214.70 on Monday.
Following the QIP issue of 30 million shares, promoter holding in Sobha may come down between 66% and 61%. Promoters currently hold 87% in Sobha.
Meltdown forces realty developers to shift focus on studio apartments
Meltdown forces realty developers to shift focus on studio apartments
The Financial Express, June 30, 2009, Page 16
Preeti Parashar, Chandigarh
As the demand for luxurious apartments declines in the northern region, real estate developers are now turning toward studio apartments, which have suddenly become popular.
While some developers have announced fresh projects for developing studio apartments, others have opted to convert the ongoing projects into one-room or two-room apartments. Market experts view this as a corrective measure being adopted by the developers to counter the slump in the realty market.
Delhi-based developer, Sandwoods Infratech Projects, after developing two luxury housing projects in Zirakpur (Punjab), has moved on to develop studio apartments priced between Rs 6.22-6.55 lakh in Baddi, the industrial hub of Himachal Pradesh. Taking care of the basic needs of the middle income group, the company is offering 360 one-room apartments in Baddi.
SK Bagolia, managing director of Sandwoods Infratech, told FE, "We are coming up with a five-storey Sandwoods Heights in Baddi and the apartments have been priced keeping in mind the needs of the service class as well as the skilled class. We have also launched another residential project in Shimla recently in the affordable housing segment.”
Another realtor, CHD Developers, is targeting tier-II and tier-III cities for further expansion. After launching projects in Vrindavan (UP), Rishikesh (Uttarakhand), Neemrana (Rajasthan) and Karnal (Haryana), the company is planning to develop a studio apartments project in Vrindavan and another group housing project at Haridwar. These plans are likely to be announced within the next few months.
Besides studio apartments, companies are also launching service apartments. For instance, Omaxe is set to announce limited service apartments in Omaxe Royal Residency on Pakhowal Road, Ludhiana. “These apartments, with an area of 650 square feet each, are likely to be launched in July. The apartments will be fully furnished and act as alternatives to good hotels,” said an Omaxe official.
Enquiries in Baddi revealed that many developers have applied for converting their present luxury housing projects to studio apartment projects. “Studio apartments are in demand here as companies rent them out to employees. We have dedicated two blocks of the total 23 in our residential project to studio apartments and have applied to develop more blocks in the same category. The rentals here for fully-furnished two-room sets range between Rs 10,000 and Rs 12,000 per month,” said SK Bajaj of Shakun Infrastructure Development, Baddi.
The Financial Express, June 30, 2009, Page 16
Preeti Parashar, Chandigarh
As the demand for luxurious apartments declines in the northern region, real estate developers are now turning toward studio apartments, which have suddenly become popular.
While some developers have announced fresh projects for developing studio apartments, others have opted to convert the ongoing projects into one-room or two-room apartments. Market experts view this as a corrective measure being adopted by the developers to counter the slump in the realty market.
Delhi-based developer, Sandwoods Infratech Projects, after developing two luxury housing projects in Zirakpur (Punjab), has moved on to develop studio apartments priced between Rs 6.22-6.55 lakh in Baddi, the industrial hub of Himachal Pradesh. Taking care of the basic needs of the middle income group, the company is offering 360 one-room apartments in Baddi.
SK Bagolia, managing director of Sandwoods Infratech, told FE, "We are coming up with a five-storey Sandwoods Heights in Baddi and the apartments have been priced keeping in mind the needs of the service class as well as the skilled class. We have also launched another residential project in Shimla recently in the affordable housing segment.”
Another realtor, CHD Developers, is targeting tier-II and tier-III cities for further expansion. After launching projects in Vrindavan (UP), Rishikesh (Uttarakhand), Neemrana (Rajasthan) and Karnal (Haryana), the company is planning to develop a studio apartments project in Vrindavan and another group housing project at Haridwar. These plans are likely to be announced within the next few months.
Besides studio apartments, companies are also launching service apartments. For instance, Omaxe is set to announce limited service apartments in Omaxe Royal Residency on Pakhowal Road, Ludhiana. “These apartments, with an area of 650 square feet each, are likely to be launched in July. The apartments will be fully furnished and act as alternatives to good hotels,” said an Omaxe official.
Enquiries in Baddi revealed that many developers have applied for converting their present luxury housing projects to studio apartment projects. “Studio apartments are in demand here as companies rent them out to employees. We have dedicated two blocks of the total 23 in our residential project to studio apartments and have applied to develop more blocks in the same category. The rentals here for fully-furnished two-room sets range between Rs 10,000 and Rs 12,000 per month,” said SK Bajaj of Shakun Infrastructure Development, Baddi.
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