Friday, January 1, 2010
Infrastructure firms upbeat on prospects
Infrastructure firms upbeat on prospects
The Hindu Business Line, January 1, 2010, Page 3
But high interest rates could cause problems.
V. Rishi Kumar, Hyderabad
Infrastructure firms are upbeat on the business prospects next year but want the Government to play a major role in accelerating the sector's growth, in terms of faster clearance of projects and by ensuring adequate liquidity.
An interaction with a few industry players revealed that some of the companies feel that the sectoral cap on banks was a matter of concern as was the prospect of growing cost of finance, which they believe is imminent due to the Reserve Bank of India's intervention to tackle inflation.
The Chairman of Lanco Infratech, Mr L. Madhusudhan Rao, said that 2009 has managed to take on the global economic slowdown in its stride and ended on a positive note for the infrastructure companies.
The options for raising finance too have increased. The capital markets are conducive to raising funds, banks are willing to lend to good projects.
However, the Government's assurances to expedite infrastructure growth are yet to come through. More focussed support and faster clearances are required for road, port and airport projects, Mr Rao said.
“The power sector, for instance is likely to register a strong growth. And we expect this to continue in the current mode. However, the projected Plan targets may be hard to meet as we have already slipped,” he said.
The Chairman and Managing Director of IVRCL, Mr E. Sudhir Reddy, said with the economy growing at 7-8 per cent and greater focus from the Government on infrastructure through the public-private participatory (PPP) mode, this sector will see more investments and the momentum will continue.
There have been a few issues such as special economic zones (SEZs) not delivering to the extent they were intended to as many developers perceived them as real estate ventures, he felt. With the steel, power and cement sectors augmenting capacities, the Government needs to play a pro-active role in creating the necessary demand. Nearly one lakh crore worth road projects are up for award presenting opportunities. “Few years ago, we had only one $1 billion plus infrastructure company, we now have over half a dozen of them, reflecting that the sector continues to witness buoyancy,” Mr Reddy said.
The Chief Financial Officer of GVK Power and Infrastructure Ltd, Mr Isaac A. George, said, “There are some apprehensions that the interest rates will go up as RBI won't be a silent spectator to raising inflation levels, including food inflation.
“Most of the infrastructure companies, which rely on bank loans could face the prospect of higher interest rates. Therefore, the Government needs to play a pro-active role in achieving Plan targets. Already the power sector has slipped targets,” he said.
The Chief Financial Officer of Nagarjuna Construction Company Ltd, Mr Y.D. Murthy, said, "The macro economic conditions for infrastructure are positive. Lot of orders are up for award by the NHAI by middle of 2010."
"When it comes to project finance, bankers continue to lend promoters with strong balance sheet but the double-digit interest rate is a matter of concern. We have an order book of over Rs 16,000 crore and expect to bid for more BOT projects," Mr Murthy said.
The Hindu Business Line, January 1, 2010, Page 3
But high interest rates could cause problems.
V. Rishi Kumar, Hyderabad
Infrastructure firms are upbeat on the business prospects next year but want the Government to play a major role in accelerating the sector's growth, in terms of faster clearance of projects and by ensuring adequate liquidity.
An interaction with a few industry players revealed that some of the companies feel that the sectoral cap on banks was a matter of concern as was the prospect of growing cost of finance, which they believe is imminent due to the Reserve Bank of India's intervention to tackle inflation.
The Chairman of Lanco Infratech, Mr L. Madhusudhan Rao, said that 2009 has managed to take on the global economic slowdown in its stride and ended on a positive note for the infrastructure companies.
The options for raising finance too have increased. The capital markets are conducive to raising funds, banks are willing to lend to good projects.
However, the Government's assurances to expedite infrastructure growth are yet to come through. More focussed support and faster clearances are required for road, port and airport projects, Mr Rao said.
“The power sector, for instance is likely to register a strong growth. And we expect this to continue in the current mode. However, the projected Plan targets may be hard to meet as we have already slipped,” he said.
The Chairman and Managing Director of IVRCL, Mr E. Sudhir Reddy, said with the economy growing at 7-8 per cent and greater focus from the Government on infrastructure through the public-private participatory (PPP) mode, this sector will see more investments and the momentum will continue.
There have been a few issues such as special economic zones (SEZs) not delivering to the extent they were intended to as many developers perceived them as real estate ventures, he felt. With the steel, power and cement sectors augmenting capacities, the Government needs to play a pro-active role in creating the necessary demand. Nearly one lakh crore worth road projects are up for award presenting opportunities. “Few years ago, we had only one $1 billion plus infrastructure company, we now have over half a dozen of them, reflecting that the sector continues to witness buoyancy,” Mr Reddy said.
The Chief Financial Officer of GVK Power and Infrastructure Ltd, Mr Isaac A. George, said, “There are some apprehensions that the interest rates will go up as RBI won't be a silent spectator to raising inflation levels, including food inflation.
“Most of the infrastructure companies, which rely on bank loans could face the prospect of higher interest rates. Therefore, the Government needs to play a pro-active role in achieving Plan targets. Already the power sector has slipped targets,” he said.
The Chief Financial Officer of Nagarjuna Construction Company Ltd, Mr Y.D. Murthy, said, "The macro economic conditions for infrastructure are positive. Lot of orders are up for award by the NHAI by middle of 2010."
"When it comes to project finance, bankers continue to lend promoters with strong balance sheet but the double-digit interest rate is a matter of concern. We have an order book of over Rs 16,000 crore and expect to bid for more BOT projects," Mr Murthy said.
The biggest challenge before us is to tackle inflation, which may cross the seven per cent mark by end-March. - Dr C. Rangarajan
The biggest challenge before us is to tackle inflation, which may cross the seven per cent mark by end-March. - Dr C. Rangarajan
The Hindu Business Line, January 1, 2010, Page 6
Dr C. Rangarajan, Chairman, Economic Advisory Council to the Prime Minister
I am of the view that 2010 will definitely be a better year for the Indian economy than the year that went by. For one, the global financial situation is improving, which will significantly lessen the negative impact on the Indian economy. Then, hopefully, we will have better monsoons next year, which will nudge up agricultural production.
I forecast that we will end this fiscal (2009-2010) with a GDP growth of 7 to 7.5 per cent. While the agricultural sector may see a negative growth of between 1 and 2 per cent, the industrial and service sectors could trace a growth rate of 8.6 per cent and 8.7 per cent respectively.
We are now getting back to a higher growth path and I forecast a GDP growth of about 8 per cent for 2010. But, in the long run, the economy needs to grow at 9 per cent for the next two decades, if we aspire to significantly improve the quality of life of the common man. The biggest challenge before us is to tackle inflation, which may cross the seven per cent mark (with respect to Wholesale Price Index) by end-March and this is a matter of concern. We should act on the supply side, backed by monetary actions that reduce liquidity.
The second biggest challenge before us is to ensure adequate power generation to meet the requirement of a rising growth rate of the economy. In the first two years of the Eleventh Plan itself India had a shortfall in power generation vis-à-vis the target. In my estimate, India needs to generate an additional 50,000 MW in the last two years of the current Plan period. Another challenge before us is managing fiscal deficit, even though the stimulus package on the fiscal side will continue up to March . I feel that next year we should prudently balance two things — adequate demand pick-up to sustain growth and starting of the process of fiscal consolidation. We should target bringing down the fiscal deficit by one to 1.5 per cent, which, however, will still be above the FRBM (Fiscal Responsibility and Budget Management) target.
I feel it will take two years to return to sustainable high growth rate of 8.5-9 per cent. - Dr Arvind Virmani, Executive Director, IMF
I feel it will take two years to return to sustainable high growth rate of 8.5-9 per cent. - Dr Arvind Virmani, Executive Director, IMF
The Hindu Business Line, January 1, 2010, Page 6
As far as India's economic growth for 2010-11 is concerned, I expect it to be about 8 per cent with an upward bias. For the current fiscal, I stick to the projection made in the Economic Survey, which is 7+/- 0.75 per cent.
If people are planning to invest in manufacturing, industry and real estate, in my view, they should not assume a growth rate of more than 9 per cent in next 5-10 years. They should plan on that basis.
If you are little cautious you should assume 8.5-9 per cent. A GDP growth of 8.5-9 per cent is the long term sustainable growth rate on the basis of which you should make plans for investments in India.
In 2009-10, despite the strong show in Q2, we could end up lower than 7 per cent GDP growth. I still would not put too much faith on what people are saying about agriculture. You could have another adjustment in agriculture. The uncertainty remains. I can't predict.
India will be back to the high growth path from 2011-12. I feel it will take two years to return to sustainable high growth rate of 8.5-9 per cent. It's not likely that given the global situation (state of the US economy primarily and the EU and Japan secondarily), we will get back to the high growth path in 2010-11 itself. The weakness of the global system does affect the speed at which we get back to the high growth path.
(As told to K.R. Srivats, New Delhi)
The Hindu Business Line, January 1, 2010, Page 6
As far as India's economic growth for 2010-11 is concerned, I expect it to be about 8 per cent with an upward bias. For the current fiscal, I stick to the projection made in the Economic Survey, which is 7+/- 0.75 per cent.
If people are planning to invest in manufacturing, industry and real estate, in my view, they should not assume a growth rate of more than 9 per cent in next 5-10 years. They should plan on that basis.
If you are little cautious you should assume 8.5-9 per cent. A GDP growth of 8.5-9 per cent is the long term sustainable growth rate on the basis of which you should make plans for investments in India.
In 2009-10, despite the strong show in Q2, we could end up lower than 7 per cent GDP growth. I still would not put too much faith on what people are saying about agriculture. You could have another adjustment in agriculture. The uncertainty remains. I can't predict.
India will be back to the high growth path from 2011-12. I feel it will take two years to return to sustainable high growth rate of 8.5-9 per cent. It's not likely that given the global situation (state of the US economy primarily and the EU and Japan secondarily), we will get back to the high growth path in 2010-11 itself. The weakness of the global system does affect the speed at which we get back to the high growth path.
(As told to K.R. Srivats, New Delhi)
Independent regulator for highways proposed
Independent regulator for highways proposed
The Hindu Business Line, January 1, 2010, Page 15
Bid to ensure quality service for those paying tolls.
A line of vehicles at a toll booth
Mamuni Das, New Delhi,
The Road Transport and Highways Ministry is actively considering a proposal to have an “independent regulatory body” which will be mandated to ensure that the highway users get a certain level of quality service for the toll they pay.
The regulatory body, which is proposed to be outside of the National Highways Authority of India (NHAI), will ensure that the road contractors and developers maintain the standards that they are supposed to according to the concession agreement between them and the NHAI.
Currently, the NHAI is the implementing agency for highway development projects and it is also supposed to function as a regulator.
The NHAI has implemented 77 projects on a public private partnership basis, according to recent data of the Department of Economic Affairs.
“There are facilities including parking slots along the highways or lay byes, rest rooms and restaurants which a road developer is supposed to provide. After all, he is levying the toll for not the just the highway but these services as well. But, usually, the trend has been that once the roads are ready, the tolling starts and everything else is forgotten. The users then do not really have a forum to register their complaints on any highway developer as well,” an official source aware of the development told Business Line.
On whether there exists any data on how many concessionaires are deviating from the service deliveries as promised in the concession agreement, the official replied in negative. “That is precisely why there is such a need,” he said.
Recently, a parliamentary committee -- the Committee of Public Undertakings – also took a grim view of the fact that the concessionaire in Delhi-Gurgaon highway, which is a NHAI project, is not providing basic roadside amenities almost two years after it started functioning.
“All aspects monitoring and supervision were left in the hands of independent consultants,” the committee said and questioned the monitoring role of the Road Transport Ministry and the NHAI in the context of this project.
NHAI's stand
“The NHAI has washed off its hands of its responsibilities by submitting that monitoring and supervision is the responsibility of the independent consultants. Thereafter, the Government has washed off its hands by submitting that it is for the NHAI to enforce the provisions and has to give directions only if something is brought to their notice,” the committee stated in its report.
A Cabinet note will be floated subject to the approval of the Road Transport and Highways Minister, Mr Kamal Nath.
Market miracle in '09, hope floats for 2010
Market miracle in '09, hope floats for 2010
The Economic Times, January 1, 2010, Page 1
ET Bureau, MUMBAI
The year 2009 though agonising at the start, has had an ecstatic end.
The year was the second best for stocks in two decades, and both the years were delivered by Manmohan Singh. First in 1991, as the finance minister and now as the Prime Minister.
Gloom enveloped investors as the year began with the credit crisis threatening to cause long-term damage to the economy and the market. For, the year before saw an unprecedented outflow of foreign funds after the collapse of the once invincible investment banks such as Lehman Brothers and Bear Stearns.
The Manmohan Singh government and the Reserve Bank of India governor Duvvuri Subbarao slashed taxes and opened the floodgates of liquidity, boosting morale that brought back global investors. These actions saw the benchmark sensitive index of the Bombay Stock Exchange surge 81% during the year, just a shade below the 82% gain in 1991, the year when Manmohan Singh took charge at the finance ministry under Prime Minister PV Narasimha Rao. That year, Sensex ended at 1,908 and in 2009, at 17,464. The index had given negative returns for just five years in the past two decades, with it remaining flat in 1996.
One of the most agonising moments was in early January, when Ramalinga Raju, the former chairman of Satyam Computer Services, disclosed an accounting fraud, leading to the stock crashing more than 85% in a couple of sessions. It made the question of ‘corporate governance in India’ rear its head once again after a decade of painful image building.
Many pundits predicted the worst global recession since the Great Depression in 1930s was under way and the hopes of the hundred-crore population may remain just a dream for a long time to come. But, the collective will of the people in the General Elections overshadowed the scepticism.
They brought back Manmohan Singh as the prime minister for a second term, but without the crutches, the Left. He has promised to walk the economic reform path briskly.
It was a New Year with three cheers on May 18. For, the first time ever, Indian stock markets were shut for soaring unbelievably. Previous shut downs were only to avoid crashes. The Sensex soared 17% that Monday.
Global investors followed. The tally this year is more than $17 billion of investments, more than what they took home a year before. Armed with cheap funds, thanks to the near-zero interest rates in the US, these investors started purchasing beaten-down shares of emerging markets, including India.
The profiles of foreign investors that drove the rally in 2009 were different compared to the previous bull run. Unlike the bull phase of 2005-07, where hedge funds dominated foreign institutional inflows into Indian equities, global exchange-traded funds are behind the 2009 rally, reflecting belief in the macro economy.
The rally has brought life to many companies such as real estate developer Unitech and wind-turbine maker Suzlon Energy, which were on the brink of default. Debt-laden companies sold shares to institutional investors and bailed themselves out. There was a turnaround in investor perception about some companies too. Tata Motors, which bought Jaguar Land Rover, was the best performing stock in the Sensex with a gain of 398%, after it was beaten down for amassing debt to buy those iconic brands. It was followed by Mahindra & Mahindra at 293% and metals company Sterlite Industries advancing 230%.
Of course, the year was not without its share of villains. The industry that revolutionised the way people operate — telecom — was a loser. Reliance Communications of Anil Ambani was the worst-performing Sensex stock losing 24%, followed by Bharti Airtel, which had backed away from combining with South Africa’s MTN Group citing legal issues, at 8%. The new year may not be as rewarding as the past one, but pundits believe it can’t be as bad as the past one threatened to be. Is anyone saying “this time it is different.”
Food inflation at 19.83% on high potato, pulses rates
Food inflation at 19.83% on high potato, pulses rates
Business Standard, January 1, 2010, Page 7
BS Reporter / New Delhi
Food inflation, as measured by the Wholesale Price Index (WPI), rose to 19.83 per cent for the week ended December 19 primarily due to rising prices of potatoes, pulses and other vegetables. Food inflation stood at 18.65 per cent for the previous week ended December 12 and at 9.38 per cent during the corresponding period in 2008.
Food price inflation for the week ended December 5 accelerated to 19.95 per cent, the highest in 11 years. Average food inflation as on December 19 stood at 12 per cent, while inflation of primary articles (non-processed items), including food, on a point-on-point basis stood at 15.49 per cent for the week.
“Contrary to expectations that the food prices will moderate in December, they kept increasing. This has happened because of the drought and untimely rain. Also, uneven temperature in northern India might affect rabi crops. It is very difficult to predict when the food prices will moderate. It will only be clear next month when the rabi crop output will be there, said Rupa Rege Nitsure, chief economist, Bank of Baroda.
Food prices have been rising due to deficient rainfall which has aggravated supply side concerns especially for rice, pulses and wheat. Cereals and pulses, which constitute the essential consumption basket of the common man, registered inflation rates of 13.81 per cent and 41.69 per cent, respectively, for the week against 10.33 per cent and 13.21 per cent in the corresponding period last year.
The rising food inflation has been adding to inflationary expectations leading many analysts to expect a hike in the cash reserve ratio in the quarterly monetary review by the Reserve Bank of India on January 29. However, that might not affect food prices but help in managing inflationary expectations.
The annual rate of inflation was highest for potatoes at 132.74 per cent for the week under consideration.
Prices of fuel, power, light and lubricants rose at a rate of 4.45 per cent during the week ended December 19 from 3.94 per cent a week ago. This is despite the fact that LPG prices declined by 7.42 per cent, petrol by 2.18 per cent and high-speed diesel oil by 0.19 per cent on an annual basis.
FM sees negative farm growth in Q3
FM sees negative farm growth in Q3
The Financial Express, January 1, 2010, Page 2
fe Bureau, Kolkata
Exit from the stimulus package should not be too early. It should not also be too late, said Union finance minister Pranab Mukherjee. He further said the third quarter of the financial year will see negative growth in agriculture.
As part of the stimulus package, the Union government had injected Rs 1,86,000 crore in two doses followed by a third dose of around Rs 36,000 crore.
“It should not be too late. I believe there should not be too much of public debt so that private sector is elbowed out. At the same time, the exit should not to be too early otherwise there is a fear of economy collapsing again. We need to strike a balance,” he said.
Pointing out that there is no reason to believe that excess liquidity in the system is driving the prices upwards, he said, “Till now there has not been any inflation due to excess liquidity in the financial system. Government is taking measures on the supply side. We will have to work out a durable solution.”
According to Mukherjee, impact of drought was exaggerated and remarks of the government over likely shortages of food gave a chance to international suppliers to jack up prices. This has also encouraged hoarding. “We had put food items under Open General Licence list but still there is no surge in imports,” he said.
In an attempt to reduce the impact of high food grain prices, the govenment’s food procurement in the current year would surpass previous year’s level, Mukherjee said.
“Last year’s procurement was made at record levels and going by this year’s trend, we believe that level would be crossed,” he said. The finance minister also said the growth in agriculture would be negative in the October-December period. “Agriculture remains a disturbing area for the government and we expect it to clock a negative growth in the third quarter,” he said. He also said the government’s efforts to reduce inflationary pressure are not reaching out the common people. Subsidised items are not reaching the people through public distribution system due to ineffective deliver mechanism.
Fiscal deficit up by 73% till Nov
Fiscal deficit up by 73% till Nov
The Financial Express, January 1, 2010, Page 2
Press Trust of India, New Delhi
The fiscal deficit rose by 73% to Rs 3.06 lakh crore in the first eight months of the fiscal against Rs 1.77 lakh crore a year ago, as the government cut taxes and stepped up expenditure to stimulate the economy hit by the global financial crisis.
At this level, fiscal deficit has already touched 76.4% of the budgeted estimate at Rs 4.01 lakh crore for the entire fiscal. To spur economic activity, the government initiated massive spending programmes and slashed duties from December last year. This has, in fact led, to revision of fiscal deficit from the estimated 2.5% of GDP last year to 6% this fiscal.
The Centre’s expenditure stood at Rs 6.21 lakh crore,while receipts were just Rs 3.15 lakh crore till November, leading to fiscal deficit of over Rs 3 lakh crore. In fact, the government has pegged total expenditure at record level of over Rs 10 lakh crore this fiscal, 60% of which has already been incurred till November.
Of more than Rs 6-lakh crore expenditure incurred by the Centre, 72% is accounted by non-Plan outgo including interest payments. The government’s tax collections at Rs 2.32 lakh crore contributed the most to its kitty. The revenue deficit, which is the excess of revenue expenditure like those in salaries over revenue income, rose to Rs 2.58 lakh crore till November, a rise of 82% over the last year’s figures of Rs 1.41 lakh crore.
The Financial Express, January 1, 2010, Page 2
Press Trust of India, New Delhi
The fiscal deficit rose by 73% to Rs 3.06 lakh crore in the first eight months of the fiscal against Rs 1.77 lakh crore a year ago, as the government cut taxes and stepped up expenditure to stimulate the economy hit by the global financial crisis.
At this level, fiscal deficit has already touched 76.4% of the budgeted estimate at Rs 4.01 lakh crore for the entire fiscal. To spur economic activity, the government initiated massive spending programmes and slashed duties from December last year. This has, in fact led, to revision of fiscal deficit from the estimated 2.5% of GDP last year to 6% this fiscal.
The Centre’s expenditure stood at Rs 6.21 lakh crore,while receipts were just Rs 3.15 lakh crore till November, leading to fiscal deficit of over Rs 3 lakh crore. In fact, the government has pegged total expenditure at record level of over Rs 10 lakh crore this fiscal, 60% of which has already been incurred till November.
Of more than Rs 6-lakh crore expenditure incurred by the Centre, 72% is accounted by non-Plan outgo including interest payments. The government’s tax collections at Rs 2.32 lakh crore contributed the most to its kitty. The revenue deficit, which is the excess of revenue expenditure like those in salaries over revenue income, rose to Rs 2.58 lakh crore till November, a rise of 82% over the last year’s figures of Rs 1.41 lakh crore.
IT, ITeS mkt to revive in 2010, to grow 15%: IDC
IT, ITeS mkt to revive in 2010, to grow 15%: IDC
The Financial Express, January 1, 2010, Page 3
fe Bureau, New Delhi
After witnessing a slowdown in demand over the last year, the domestic IT and ITeS market is expected to revive in 2010 and witness a growth rate of 15% to touch the Rs 1,20,666-crore revenue mark. According to market research firm IDC, the market is expected to grow at a rate of 5.4% in 2009 and record revenues of Rs 1,04,906 crore.
The domestic IT market (excluding domestic ITeS) is expected to register a marginal growth of 2.8%, to report revenues of Rs 95,268 crore. The domestic ITeS market is expected to grow at 40.8% to report revenues of Rs 9,638 crore.
“The changes that began last year would take concrete shape in 2010. As the economy recovers, both consumers and enterprises would demand services and solutions that allow them to do more with less. The key business concerns through 2010 will be business model innovation, improved productivity, faster return on investment and cost savings,” said IDC India country manager Kapil Dev Singh.
However, the firm expects the annual growth rate of domestic IT-ITeS market to reduce from an average 24% recorded during 2003-08 to 14.6% over the next five-years, up to 2013. This growth, though on a higher base, would see an increased competition spurring a rapidly changing strategy and continuous market realignment of vendors and suppliers.
The Financial Express, January 1, 2010, Page 3
fe Bureau, New Delhi
After witnessing a slowdown in demand over the last year, the domestic IT and ITeS market is expected to revive in 2010 and witness a growth rate of 15% to touch the Rs 1,20,666-crore revenue mark. According to market research firm IDC, the market is expected to grow at a rate of 5.4% in 2009 and record revenues of Rs 1,04,906 crore.
The domestic IT market (excluding domestic ITeS) is expected to register a marginal growth of 2.8%, to report revenues of Rs 95,268 crore. The domestic ITeS market is expected to grow at 40.8% to report revenues of Rs 9,638 crore.
“The changes that began last year would take concrete shape in 2010. As the economy recovers, both consumers and enterprises would demand services and solutions that allow them to do more with less. The key business concerns through 2010 will be business model innovation, improved productivity, faster return on investment and cost savings,” said IDC India country manager Kapil Dev Singh.
However, the firm expects the annual growth rate of domestic IT-ITeS market to reduce from an average 24% recorded during 2003-08 to 14.6% over the next five-years, up to 2013. This growth, though on a higher base, would see an increased competition spurring a rapidly changing strategy and continuous market realignment of vendors and suppliers.
IT, ITeS mkt to revive in 2010, to grow 15%: IDC
IT, ITeS mkt to revive in 2010, to grow 15%: IDC
The Financial Express, January 1, 2010, Page 3
fe Bureau, New Delhi
After witnessing a slowdown in demand over the last year, the domestic IT and ITeS market is expected to revive in 2010 and witness a growth rate of 15% to touch the Rs 1,20,666-crore revenue mark. According to market research firm IDC, the market is expected to grow at a rate of 5.4% in 2009 and record revenues of Rs 1,04,906 crore.
The domestic IT market (excluding domestic ITeS) is expected to register a marginal growth of 2.8%, to report revenues of Rs 95,268 crore. The domestic ITeS market is expected to grow at 40.8% to report revenues of Rs 9,638 crore.
“The changes that began last year would take concrete shape in 2010. As the economy recovers, both consumers and enterprises would demand services and solutions that allow them to do more with less. The key business concerns through 2010 will be business model innovation, improved productivity, faster return on investment and cost savings,” said IDC India country manager Kapil Dev Singh.
However, the firm expects the annual growth rate of domestic IT-ITeS market to reduce from an average 24% recorded during 2003-08 to 14.6% over the next five-years, up to 2013. This growth, though on a higher base, would see an increased competition spurring a rapidly changing strategy and continuous market realignment of vendors and suppliers.
The Financial Express, January 1, 2010, Page 3
fe Bureau, New Delhi
After witnessing a slowdown in demand over the last year, the domestic IT and ITeS market is expected to revive in 2010 and witness a growth rate of 15% to touch the Rs 1,20,666-crore revenue mark. According to market research firm IDC, the market is expected to grow at a rate of 5.4% in 2009 and record revenues of Rs 1,04,906 crore.
The domestic IT market (excluding domestic ITeS) is expected to register a marginal growth of 2.8%, to report revenues of Rs 95,268 crore. The domestic ITeS market is expected to grow at 40.8% to report revenues of Rs 9,638 crore.
“The changes that began last year would take concrete shape in 2010. As the economy recovers, both consumers and enterprises would demand services and solutions that allow them to do more with less. The key business concerns through 2010 will be business model innovation, improved productivity, faster return on investment and cost savings,” said IDC India country manager Kapil Dev Singh.
However, the firm expects the annual growth rate of domestic IT-ITeS market to reduce from an average 24% recorded during 2003-08 to 14.6% over the next five-years, up to 2013. This growth, though on a higher base, would see an increased competition spurring a rapidly changing strategy and continuous market realignment of vendors and suppliers.
India is world’s third best performing market in 2009
India is world’s third best performing market in 2009
The Financial Express, January 1, 2010, Page 4
PK Dey, Mumbai
India was the third best performing market in the world in 2009 just behind Russia and Brazil.
While the BSE Sensex returned 81%, the Brazilian market gave investors a slightly higher return of 82.7% and the Russian market offered investors a handsome return of 111.6%. During 2009, Indian markets were buoyant on FII buying and the rally across the global markets. Metal, oil & gas, power and capital goods stocks led the rally throughout 2009. The broad market as measured by the movement of BSE Sensex, gained by 81% from December 31,2008 to December 31, 2009.This return was higher than the eleven major world indices such as Nasdaq Composite Index, S&P 500 Index, Dow Jones Industrial Average and Nikkei 225.
Mehul Dedhia, associate vice-president at Sharekhan said, “There are three major reasons for such a surge in the markets. Firstly, the condition of global markets has improved and we are also witnessing huge inflows from foreign funds. Apart from that in the last two quarters, we also saw strong earnings growth. The major game changer was the general elections in which Congress-led UPA government came with the clean majority.”
The Dow Jones Industrial Average ended higher by 1772.11 points (20.2%) at 10548.50 on December 30, 2009. Recently, the US Federal Reserve plans to offer term deposits to banks as part of its “ exit strategy” from the exceptionally loose monetary policy used to fight recession. Better-than-expected report on Midwest manufacturing helped sentiment. Nasdaq composite index ended higher by 714.25 points at 2291.28. S&P 500 also ended higher by 223.17 points at 1126.42 on Decemeber 30, 2009. The Nikkei 225 of Japan appreciated by 19% during 2009, buoyed by trading firms such as Mitsui & Co after gains in oil & metals prices, while automakers also edged up. Shanghai SE Composite Index gave 79.2% return in 2009 which is next to India despite higher GDP growth. According to Bloomberge UTV Stock Market News, Beijing will stick to its loose monetary stance, but will try to be more flexible in implementing its policies, People’s Bank of China Governor Zhou Xiaochuan said recently.
From the above analysis, one thing is clear that emerging market economies are outpacing developed countries in global economic recovery and may continue to do so for some time.
D R Dogra, deputy managing director,CARE, said, “ The effect of economic slowdown on India was significantly lower as compared to other markets.”
The Financial Express, January 1, 2010, Page 4
PK Dey, Mumbai
India was the third best performing market in the world in 2009 just behind Russia and Brazil.
While the BSE Sensex returned 81%, the Brazilian market gave investors a slightly higher return of 82.7% and the Russian market offered investors a handsome return of 111.6%. During 2009, Indian markets were buoyant on FII buying and the rally across the global markets. Metal, oil & gas, power and capital goods stocks led the rally throughout 2009. The broad market as measured by the movement of BSE Sensex, gained by 81% from December 31,2008 to December 31, 2009.This return was higher than the eleven major world indices such as Nasdaq Composite Index, S&P 500 Index, Dow Jones Industrial Average and Nikkei 225.
Mehul Dedhia, associate vice-president at Sharekhan said, “There are three major reasons for such a surge in the markets. Firstly, the condition of global markets has improved and we are also witnessing huge inflows from foreign funds. Apart from that in the last two quarters, we also saw strong earnings growth. The major game changer was the general elections in which Congress-led UPA government came with the clean majority.”
The Dow Jones Industrial Average ended higher by 1772.11 points (20.2%) at 10548.50 on December 30, 2009. Recently, the US Federal Reserve plans to offer term deposits to banks as part of its “ exit strategy” from the exceptionally loose monetary policy used to fight recession. Better-than-expected report on Midwest manufacturing helped sentiment. Nasdaq composite index ended higher by 714.25 points at 2291.28. S&P 500 also ended higher by 223.17 points at 1126.42 on Decemeber 30, 2009. The Nikkei 225 of Japan appreciated by 19% during 2009, buoyed by trading firms such as Mitsui & Co after gains in oil & metals prices, while automakers also edged up. Shanghai SE Composite Index gave 79.2% return in 2009 which is next to India despite higher GDP growth. According to Bloomberge UTV Stock Market News, Beijing will stick to its loose monetary stance, but will try to be more flexible in implementing its policies, People’s Bank of China Governor Zhou Xiaochuan said recently.
From the above analysis, one thing is clear that emerging market economies are outpacing developed countries in global economic recovery and may continue to do so for some time.
D R Dogra, deputy managing director,CARE, said, “ The effect of economic slowdown on India was significantly lower as compared to other markets.”
RBI to review rates in its next policy
RBI to review rates in its next policy
The Financial Express, January 1, 2010, Page 13
Reuters, Hyderabad
The Reserve Bank of India (RBI) will review interest rates at its next policy review scheduled for January 29 and not before, a deputy RBI governor said on Thursday.
“Wait for 29th. It can’t be speculated. If it has to happen, it will happen on 29th. You will have to wait for that,” said KC Chakrabarty, a deputy governor of the RBI, when asked whether and when the central bank would adjust rates.
India and South Korea are widely expected to be among the first Group of 20 nations to follow Australia and raise interest rates as they recover from the global slowdown.
Some economists expect inflation in India to reach 8% by the end of March, above the RBI’s comfort level. The RBI can adjust monetary policy at any time, and has changed interest rates outside of its scheduled quarterly policy reviews on numerous occasions.
Of the six cuts in the repo rate between October 2008 and April, only the last reduction came at a policy review. Chakrabarty became one of the four deputy RBI governors in June, although another deputy heads RBI’s monetary policy department.
Chakrabarty, speaking to reporters on the sidelines of an event in the southern city of Hyderabad, also said the RBI is not worried about yields on the 10-year government bond , which traded at 7.66% on Thursday and last week touched 7.75%, the highest since November 2008.
India is borrowing a record Rs 4.51 lakh crore ($97 billion) this year, and high rates add to the government’s borrowing cost as it manages a fiscal deficit running at 6.8% of GDP, a 16-year highhave not heated up that they need to cool down. Seven to 8 % yield on 10-year is not uncomfortable, dangerous nor worrisome. It will go up and come down,” said Chakrabarty.
Food price inflation rose to 19.83% in the year through December 19, and while policymakers have expressed concern that high food prices could spur broader inflationary pressure, they also note that monetary policy is largely powerless to address supply-side shortages.
“Monetary tools are not always effective for everything. We have to find the cause. If the cause is due to monetary issue, then monetary policy will be effective,” Chakrabarty said.
Credit growth in India, which reached nearly 30 percent in 2007, recently troughed below 10% in annual terms but is expected to climb in coming months. The economy is forecast to grow by roughly 7% in the fiscal year that ends in March.
Chakrabarty said it was “OK” for credit to grow at 12% when the economy was growing at 6%. Chakrabarty expects bank credit to grow 15-20% in the current financial year. Bank credit grew an annual 11.8% on December 18, according to RBI data.
The Financial Express, January 1, 2010, Page 13
Reuters, Hyderabad
The Reserve Bank of India (RBI) will review interest rates at its next policy review scheduled for January 29 and not before, a deputy RBI governor said on Thursday.
“Wait for 29th. It can’t be speculated. If it has to happen, it will happen on 29th. You will have to wait for that,” said KC Chakrabarty, a deputy governor of the RBI, when asked whether and when the central bank would adjust rates.
India and South Korea are widely expected to be among the first Group of 20 nations to follow Australia and raise interest rates as they recover from the global slowdown.
Some economists expect inflation in India to reach 8% by the end of March, above the RBI’s comfort level. The RBI can adjust monetary policy at any time, and has changed interest rates outside of its scheduled quarterly policy reviews on numerous occasions.
Of the six cuts in the repo rate between October 2008 and April, only the last reduction came at a policy review. Chakrabarty became one of the four deputy RBI governors in June, although another deputy heads RBI’s monetary policy department.
Chakrabarty, speaking to reporters on the sidelines of an event in the southern city of Hyderabad, also said the RBI is not worried about yields on the 10-year government bond , which traded at 7.66% on Thursday and last week touched 7.75%, the highest since November 2008.
India is borrowing a record Rs 4.51 lakh crore ($97 billion) this year, and high rates add to the government’s borrowing cost as it manages a fiscal deficit running at 6.8% of GDP, a 16-year highhave not heated up that they need to cool down. Seven to 8 % yield on 10-year is not uncomfortable, dangerous nor worrisome. It will go up and come down,” said Chakrabarty.
Food price inflation rose to 19.83% in the year through December 19, and while policymakers have expressed concern that high food prices could spur broader inflationary pressure, they also note that monetary policy is largely powerless to address supply-side shortages.
“Monetary tools are not always effective for everything. We have to find the cause. If the cause is due to monetary issue, then monetary policy will be effective,” Chakrabarty said.
Credit growth in India, which reached nearly 30 percent in 2007, recently troughed below 10% in annual terms but is expected to climb in coming months. The economy is forecast to grow by roughly 7% in the fiscal year that ends in March.
Chakrabarty said it was “OK” for credit to grow at 12% when the economy was growing at 6%. Chakrabarty expects bank credit to grow 15-20% in the current financial year. Bank credit grew an annual 11.8% on December 18, according to RBI data.
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