Tuesday, February 2, 2010
Fiscal deficit likely at 5.5%
Fiscal deficit likely at 5.5%
Hindustan Times, February 2, 2010, Page 23
The fiscal deficit for 2010-11 is likely to be pegged at 5.5 per cent of gross domestic product (GDP) as macroeconomic managers struggle to bring down government borrowings.
The fiscal deficit as a percentage of GDP is projected at 6.8 per cent this year.
The government had announced a series of measures, including tax breaks in many products, but many of these measures have left gaping hole in public finances, forcing the government to borrow a record Rs 4.51 lakh core.
“The deficit is expected to come down by 1.5 per cent every year amounting to about Rs 90,000 crore. This is a realistic target as expenditure pertaining to areas like the sixth pay commission implementation would be a one-time outflow,” an official, who did not wish to be identified, said.
While government expenses is set to cross Rs 11 lakh crore for the year mirroring the need for high public spending to spur growth, the government is banking on greater revenue buoyancy, on the back of a fast recovery in the broader economy, to rein in the fiscal deficit.
The economy has recovered faster than the government had anticipated.
Hindustan Times, February 2, 2010, Page 23
The fiscal deficit for 2010-11 is likely to be pegged at 5.5 per cent of gross domestic product (GDP) as macroeconomic managers struggle to bring down government borrowings.
The fiscal deficit as a percentage of GDP is projected at 6.8 per cent this year.
The government had announced a series of measures, including tax breaks in many products, but many of these measures have left gaping hole in public finances, forcing the government to borrow a record Rs 4.51 lakh core.
“The deficit is expected to come down by 1.5 per cent every year amounting to about Rs 90,000 crore. This is a realistic target as expenditure pertaining to areas like the sixth pay commission implementation would be a one-time outflow,” an official, who did not wish to be identified, said.
While government expenses is set to cross Rs 11 lakh crore for the year mirroring the need for high public spending to spur growth, the government is banking on greater revenue buoyancy, on the back of a fast recovery in the broader economy, to rein in the fiscal deficit.
The economy has recovered faster than the government had anticipated.
Exports up 9.3%, imports turn positive after 11 months
Exports up 9.3%, imports turn positive after 11 months
Hindustan Times, February 2, 2010, Page 23
New Delhi: The country's exports grew 9.3 per cent in December, recording a positive growth for the second successive month after a 11-month-long contraction, triggering hopes that the worst might be over for embattled exporters.
Imports too grew by a robust 27.2 per cent after contracting for 11 consecutive months, mirroring growth in domestic activity as companies start expanding on growing consumer demand.
Overseas shipments touched $14.6 billion during the month compared to $13.4 billion clocked during the same month of the previous year, latest trade data released by the government on Monday showed.
President of Federation of Indian Export Organisation A. Sakthivel said the growth in imports reflects the effect of double-digit growth in the manufacturing sector.
Hindustan Times, February 2, 2010, Page 23
New Delhi: The country's exports grew 9.3 per cent in December, recording a positive growth for the second successive month after a 11-month-long contraction, triggering hopes that the worst might be over for embattled exporters.
Imports too grew by a robust 27.2 per cent after contracting for 11 consecutive months, mirroring growth in domestic activity as companies start expanding on growing consumer demand.
Overseas shipments touched $14.6 billion during the month compared to $13.4 billion clocked during the same month of the previous year, latest trade data released by the government on Monday showed.
President of Federation of Indian Export Organisation A. Sakthivel said the growth in imports reflects the effect of double-digit growth in the manufacturing sector.
WB pegs India growth at 7.5% for FY11
WB pegs India growth at 7.5% for FY11
Financial Express, February 2, 2010, Page 2
fe Bureaus, New Delhi
The World Bank added to the rising chorus of expectations of growth rates about the Indian economy, post the global economic slowdown. In its estimate for the year 2010-11 the bank said the Indian economy is likely to grow at 7.5 % next fiscal and the growth prospects remain strong, despite “muted recovery (that) will take several years to undo the damage”.
The Bank’s annual Global Economic Prospects 2010 released on Monday, said India “is expected to grow at 7.5-8 % in 2010-11 and 2011-12, respectively, well above the 6.4 % average posted during 1995-2005”. RBI has already estimated growth in India at 7.5% for 2009-10. This comes at a time when the global recovery remains fragile and is expected to slow later this year as the impact of the fiscal stimulus measures wanes, it said.
Explaining the reasons for the growth of the economy, it says “India’s growth will benefit from the firming (up of) external demand, particularly resumption of growth in high-income countries”.
Foreign direct investment inflows to the country are expected to increase in 2010, the report said, adding this will be on the back of the recovery of the overall investment into the developing countries this year and as New Delhi improves its FDI policies.
The author of the report, Hans Timmer, who is the director of the World Bank Prospects Group said “India weathered the global crisis relatively well, in part due to the government’s quick response in easing monetary policy and counter-cyclical fiscal policy measures that supported domestic demand”. According to him the key challenge for the economy will be how successful it is in reducing its large fiscal deficit. “As private consumption gains momentum, India’s import volumes are likely to expand ..translating into a deterioration in the current account balance”. Incidentally for the current fiscal, the Bank had projected only a 6 % rate. Timmer said, the report was “not written yesterday. We just had the first quarter growth figures (6.1 %) when the report was written.”
Financial Express, February 2, 2010, Page 2
fe Bureaus, New Delhi
The World Bank added to the rising chorus of expectations of growth rates about the Indian economy, post the global economic slowdown. In its estimate for the year 2010-11 the bank said the Indian economy is likely to grow at 7.5 % next fiscal and the growth prospects remain strong, despite “muted recovery (that) will take several years to undo the damage”.
The Bank’s annual Global Economic Prospects 2010 released on Monday, said India “is expected to grow at 7.5-8 % in 2010-11 and 2011-12, respectively, well above the 6.4 % average posted during 1995-2005”. RBI has already estimated growth in India at 7.5% for 2009-10. This comes at a time when the global recovery remains fragile and is expected to slow later this year as the impact of the fiscal stimulus measures wanes, it said.
Explaining the reasons for the growth of the economy, it says “India’s growth will benefit from the firming (up of) external demand, particularly resumption of growth in high-income countries”.
Foreign direct investment inflows to the country are expected to increase in 2010, the report said, adding this will be on the back of the recovery of the overall investment into the developing countries this year and as New Delhi improves its FDI policies.
The author of the report, Hans Timmer, who is the director of the World Bank Prospects Group said “India weathered the global crisis relatively well, in part due to the government’s quick response in easing monetary policy and counter-cyclical fiscal policy measures that supported domestic demand”. According to him the key challenge for the economy will be how successful it is in reducing its large fiscal deficit. “As private consumption gains momentum, India’s import volumes are likely to expand ..translating into a deterioration in the current account balance”. Incidentally for the current fiscal, the Bank had projected only a 6 % rate. Timmer said, the report was “not written yesterday. We just had the first quarter growth figures (6.1 %) when the report was written.”
India to grow 7.5% next fiscal: World Bank
India to grow 7.5% next fiscal: World Bank
Economic Times, February 2, 2010, Page 9
NEW DELHI: The World Bank on Monday said that India is likely to grow at 7.5% in the next fiscal, while for the current fiscal its estimate is a modest 6%. This comes at a time when global recovery remains fragile and is expected to slow as the impact of the fiscal stimulus measures wanes. India is expected to grow at 7.5-8% in fiscal 2010-11 and 2011-12, well above the 6.4% average posted during 1995-2005, said the banks Global Economic Prospects 2010 report. The World Bank sees the economy growing at 6% in the current fiscal. Government’s quick response in easing monetary policy and counter-cyclical fiscal policy measures have supported domestic demand, said report’s author Hans Timmer, director World Bank Prospects Group.
Economic Times, February 2, 2010, Page 9
NEW DELHI: The World Bank on Monday said that India is likely to grow at 7.5% in the next fiscal, while for the current fiscal its estimate is a modest 6%. This comes at a time when global recovery remains fragile and is expected to slow as the impact of the fiscal stimulus measures wanes. India is expected to grow at 7.5-8% in fiscal 2010-11 and 2011-12, well above the 6.4% average posted during 1995-2005, said the banks Global Economic Prospects 2010 report. The World Bank sees the economy growing at 6% in the current fiscal. Government’s quick response in easing monetary policy and counter-cyclical fiscal policy measures have supported domestic demand, said report’s author Hans Timmer, director World Bank Prospects Group.
Parsvnath to infuse Rs 7-k cr in ongoing projects in 5 years
Parsvnath to infuse Rs 7-k cr in ongoing projects in 5 years
Financial Express, February 2, 2010, Page 4
fe Bureaus, New Delhi
Delhi-based realty firm Parsvnath Developers will invest Rs 7,000 crore over the next five years towards construction of its ongoing projects. The company also plans to raise up to Rs 300 crore through private equity by March-end. It would be done by diluting stakes to private equity firms at the project level. The company has begun talks with the private funds to this effect.
“We are currently developing 57 projects, with over 80 million sq ft of area, across the country. Of this, we have put 40 million sq ft on fast track to deliver within the next two years,” Parsvnath chairman Pradeep Jain said. Of the total area under construction, about 80% is housing and the rest commercial, he added. Parsvnath is expecting revenue to the tune of Rs 17,000 crore from these 57 projects.
Asked how the company plans to fund its projects, Jain said, “Mostly internal accruals and money coming from sales. We are not willing to increase our debt. In the next 2-3 fiscal, we foresee a debt free company.”
Meanwhile on Sunday, Parsvnath reported a robust jump of over four-fold in consolidated net profit at Rs 24.90 crore for third quarter ended December 31 against Rs 5.42 crore during the same period of the previous fiscal. Consolidated total revenue of the firm rose to Rs 305.28 crore during the third quarter of current financial year from Rs 92.77 crore of the corresponding period last fiscal.
The company’s gross debt as on December 31, 2009, stands at Rs 1,585 crore and it plans to bring it down by about Rs 100 crore in this quarter.
Parsvnath Developers to raise Rs 300 crore
Parsvnath Developers to raise Rs 300 crore
Business Standard, February 2, 2010, Page 2
BS Reporter/New Delhi
Realty company Parsvnath Developers plans to raise Rs 200-300 crore in the present quarter through private equity (PE) deals. It is in talks with a few PE companies and hopes to close two or three transactions within this quarter.
Gross debt as on December 31 was Rs 1,585 crore and it planned to bring this down by Rs 100 crore this quarter. This will be achieved by refunds from some state governments due to cancellation or stalled projects. The company also plans to launch three residential and one information technology park by the end of March, 2010.
Parsvnath reported an over four-fold increase in consolidated net profit at Rs 24.9 crore for the third quarter ended December 31, up from Rs 5.4 crore in the same quarter last year. The increase was primarily due to the completion of 37 projects, comprising 11.23 million sq ft.
The company said it would invest Rs 7,000 crore in the next five years in ongoing projects.
Business Standard, February 2, 2010, Page 2
BS Reporter/New Delhi
Realty company Parsvnath Developers plans to raise Rs 200-300 crore in the present quarter through private equity (PE) deals. It is in talks with a few PE companies and hopes to close two or three transactions within this quarter.
Gross debt as on December 31 was Rs 1,585 crore and it planned to bring this down by Rs 100 crore this quarter. This will be achieved by refunds from some state governments due to cancellation or stalled projects. The company also plans to launch three residential and one information technology park by the end of March, 2010.
Parsvnath reported an over four-fold increase in consolidated net profit at Rs 24.9 crore for the third quarter ended December 31, up from Rs 5.4 crore in the same quarter last year. The increase was primarily due to the completion of 37 projects, comprising 11.23 million sq ft.
The company said it would invest Rs 7,000 crore in the next five years in ongoing projects.
DLF: turning optimistic
DLF: turning optimistic
Financial Express, February 2, 2010, Page 6
Akash Joshi
The country’s leading real estate company DLF is seeing some improvement in the sentiment from the Street. Several analysts have upgraded their recommendations from the negative zone earlier. One of the reasons is the slow but steady uptick in real estate sales. DLF managed to recorded revenues worth Rs 2,030 crore in the December 2009 quarter, 16% higher that the September 2009, and 48% over the same quarter of the previous year. However, analysts are still not gung-ho as the operating margin was way below expectation at 41%, a sharp drop compared to the 56.5% in the December 2008 quarter and 52.2% on a sequential basis. The main reasons, cite analysts, is higher than expected revenue booking from lower margin areas, especially in the Chennai and New Gurgaon projects.
An increase of around 20% in employee costs (and other miscellaneous) also caused the margins to slump. In the December 2009 quarter, DLF sold around 3.1 million sq ft of projects with a mix of luxury, high-end and premium homes. And if the luxury market picks up further, the margins could stablise at earlier levels. Another trigger would be a pick up in office sales, which remains flat. In the first nine months of financial year 2009-10 DLF sold approximately 8.5 million sq ft of residential real estate and it is expected that the company would manage around 13.5 million sq ft and analysts would be watching out increased revenues in the last quarter.
DLF in December 2009 had announced the integration of its 100% interest in its main rental subsidiary DLF Cybercity with the holding company for DAL in a 60:40 share swap ratio. The successful listing of DAL on Singapore will boost the sentiment further. However, with interest rates coming under pressure any rate hikes would be the dampener.
Fitch retains India ratings, currency outlook still negative
Fitch retains India ratings, currency outlook still negative
Financial Express, February 2, 2010, Page 13
fe Bureaus, Mumbai
Global rating agency Fitch on Monday cautioned the government against the increasing fiscal deficit, even as it retained the current rating of the country at investment grade, which means the chances of sovereign default are comparatively low.
Fitch Ratings has retained the country’s rating at BBB-, which is an investment grade and three notches down from the highest grade. Fitch said India requires to consolidate its place in the ‘BBB’ range. The outlook on the long-term foreign currency IDR is stable, while that on the long-term local currency IDR is negative. The short-term foreign currency IDR is affirmed at ‘F3’ and the country ceiling at ‘BBB-’, says a study by Fitch, which was released on Monday.
The report adds that FY11 budget and the report of the thirteenth finance commission (13FC), both expected by end of February, would be important fiscal-policy statements. The Finance Commission was mandated to consider fundamental revenue-side reforms including introduction of a goods and services tax, and to recommend a new deficit-reduction framework. Fitch believes that India requires substantive fiscal reforms to address or offset the weaknesses exposed in FY09-FY10.
Commenting on the report, Andrew Colquhoun, director in Fitch’s Asia-Pacific Sovereign Group Fitch, said, “Fitch regards the deterioration in India’s public finances since 2008 as partly structural, putting negative pressure on the local currency rating that will require substantive fiscal reform to redress". However, talking about foreign currency ratings, Colquhoun added that it remain well supported by foreign investment prospects and by the world’s sixth-biggest stockpile of foreign reserves.
Country’s budget deficit rose in April-March 2009 to 11.6% of GDP, from 6.4% a year earlier, as revenues were eroded by tax cuts made as a stimulus measure. Fitch projects only a small reduction in the deficit to 10.7% of GDP for FY10, which takes the general government debt stock to a projected 83% of GDP by the end of FY10, undoing the results of the fiscal consolidation achieved since FY04. The government’s abandonment of the fiscal targets laid out in the Fiscal Responsibility and Budget Management Act of 2003 leaves India without a credible fiscal framework to constrain policy and reduce its debt ratios, says the report.
India's strong external finances, including its sovereign and overall net creditor status and the world's sixth-biggest stockpile of official reserves by end-2009 ($ 283bn, up 11% on a year earlier), continue to support the foreign currency ratings.
Fitch may downgrade India’s sovereign rating
Fitch may downgrade India’s sovereign rating
Economic Times, February 2, 2010, Page 14
Widening Fiscal Deficit Has Rating Agency Worried
Our Bureau MUMBAI
GLOBAL ratings firm Fitch has said it may downgrade India’s sovereign rating if the country’s fiscal deficit worsens. The rating agency has, however, retained its current local and foreign currency ratings.
Addressing the media in a teleconference, Andrew Colquhoun, director in Fitch’s Asia-Pacific Sovereign Group, said: “If we see further slippages in the Budget for FY11, that will encourage us to take (a ratings) action. Besides the fiscal position, Mr Coloquhom has also expressed concerns about India’s low ratings in World Bank’s governance indicators and also poor physical infrastructure. “Structural reforms aimed at tackling these weaknesses would support economic prospects and strengthen the sovereign credit profile,” he said.
In a statement issued on Monday, Fitch affirmed India’s long-term foreign and local currency ratings at ‘BBB-’, the lowest notch in investment grade, indicating adequate repayment capacity. Any future downgrade will tip India into the speculative grade category. While the outlook on its foreign currency bond rating is stable, that on longterm local currency rating is negative. The short-term foreign currency ratings at ‘F3’ also is the lowest notch investment grade rating, reflecting adequate repayment capacity. “Fitch regards the deterioration in India’s public finances since 2008 as partly structural, putting negative pressure on the local currency rating that will require substantive fiscal reform to redress,” Colquhoun said in a release. Fitch has also said the foreign currency ratings remain well-supported by foreign investment prospects and by the world’s sixth-biggest stockpile of foreign reserves.
India’s general government budget deficit rose in April-March 2009 (FY09) to 11.6% of GDP, from 6.4% a year earlier, on account of a combination of factors including the stimulus package of tax cuts and subsidies to contain high commodity prices, among others.
“The abandoning of the Fiscal Responsibility and Budget Management Act (FRBM 2003) leaves India without a credible fiscal framework to constrain policy and reduce its debt ratios”, it said.
Against this backdrop, the FY11 Budget and the report of the Thirteenth Finance Commission, both expected at end-February, will be important fiscal-policy statements. The Thirteenth Finance Commission was mandated to consider fundamental revenue-side reforms, including introduction of a goods and services tax, and to recommend a new deficit-reduction framework.
Notwithstanding fiscal weakness, the Indian economy continues to perform strongly, supporting the ratings. GDP growth is expected at 6.4% for FY10, strengthening to 7% in FY11. Global recovery supports India’s near-term economic prospects, with exports growth turning positive in November 2009 (+18% year on year).
Economic Times, February 2, 2010, Page 14
Widening Fiscal Deficit Has Rating Agency Worried
Our Bureau MUMBAI
GLOBAL ratings firm Fitch has said it may downgrade India’s sovereign rating if the country’s fiscal deficit worsens. The rating agency has, however, retained its current local and foreign currency ratings.
Addressing the media in a teleconference, Andrew Colquhoun, director in Fitch’s Asia-Pacific Sovereign Group, said: “If we see further slippages in the Budget for FY11, that will encourage us to take (a ratings) action. Besides the fiscal position, Mr Coloquhom has also expressed concerns about India’s low ratings in World Bank’s governance indicators and also poor physical infrastructure. “Structural reforms aimed at tackling these weaknesses would support economic prospects and strengthen the sovereign credit profile,” he said.
In a statement issued on Monday, Fitch affirmed India’s long-term foreign and local currency ratings at ‘BBB-’, the lowest notch in investment grade, indicating adequate repayment capacity. Any future downgrade will tip India into the speculative grade category. While the outlook on its foreign currency bond rating is stable, that on longterm local currency rating is negative. The short-term foreign currency ratings at ‘F3’ also is the lowest notch investment grade rating, reflecting adequate repayment capacity. “Fitch regards the deterioration in India’s public finances since 2008 as partly structural, putting negative pressure on the local currency rating that will require substantive fiscal reform to redress,” Colquhoun said in a release. Fitch has also said the foreign currency ratings remain well-supported by foreign investment prospects and by the world’s sixth-biggest stockpile of foreign reserves.
India’s general government budget deficit rose in April-March 2009 (FY09) to 11.6% of GDP, from 6.4% a year earlier, on account of a combination of factors including the stimulus package of tax cuts and subsidies to contain high commodity prices, among others.
“The abandoning of the Fiscal Responsibility and Budget Management Act (FRBM 2003) leaves India without a credible fiscal framework to constrain policy and reduce its debt ratios”, it said.
Against this backdrop, the FY11 Budget and the report of the Thirteenth Finance Commission, both expected at end-February, will be important fiscal-policy statements. The Thirteenth Finance Commission was mandated to consider fundamental revenue-side reforms, including introduction of a goods and services tax, and to recommend a new deficit-reduction framework.
Notwithstanding fiscal weakness, the Indian economy continues to perform strongly, supporting the ratings. GDP growth is expected at 6.4% for FY10, strengthening to 7% in FY11. Global recovery supports India’s near-term economic prospects, with exports growth turning positive in November 2009 (+18% year on year).
Survey indicates strong revival in manufacturing
Survey indicates strong revival in manufacturing
Business Standard, February 2, 2010, Page 1
BS Reporter / New Delhi
The HSBC Markit Purchasing Managers Index (PMI), one of the most reliable indices tracking the health of the manufacturing sector, climbed to its highest level in one-and-half years to 57.6 in January, 2010. The index had stood at 55.6 in December 2009.
“Any lingering concern that India’s manufacturing recovery was tailing off should be put off. A second consecutive rise in PMI has taken the series to a new cycle high consistent on double digit rise in industrial production,” said Robert Prior Wandesforde, Senior Asian economist, HSBC.
The positive results come against the backdrop of Reserve Bank of India’s (RBI’s) decision last week to start tightening monetary policy by raising the cash reserve ratio 75 basis points. The central bank also expressed confidence in the robust rate of growth in industrial output.
According to latest government data, industrial output as measured by the index of industrial production (IIP) grew at a robust rate of 11.7 per cent in November.
Within the disaggregated data, the new export orders index showed a more than 5 point jump, the highest since October 2007.
“Production and new orders have both increased for ten straight months…domestic and foreign demand rose considerably since December. The improvement in external demand was noticeable, although total new business growth continued to increase at a rate above export orders,” said the report.
Companies reaped the benefit of increasing new orders which led them to step up their production levels. According to the HSBC Markit report, Indian manufacturers sharply raised their output levels during the month in line with the increase in new orders and the latest gains have been above the pre downturn averages.
“ The pick-up in exports is extremely heartening and it does point towards a sustainable trend of growth in manufacturing. Growth in industrial output will stay in double digits till the end of this financial year (2009-10) and the encouraging bit is that the composition of lead indicators of the economy are now becoming more and more broad- based,” said Jyotinder Kaur and economist with HDFC.
However, though manufacturing output has gathered momentum, the recovery in employment is yet to gain traction. The index showed a “slight” increase in industry employment in January on the back of higher production requirement and capacity constraints. Although weak, the report states that the increase in employment index was the strongest in almost a year and a half.
Business Standard, February 2, 2010, Page 1
BS Reporter / New Delhi
The HSBC Markit Purchasing Managers Index (PMI), one of the most reliable indices tracking the health of the manufacturing sector, climbed to its highest level in one-and-half years to 57.6 in January, 2010. The index had stood at 55.6 in December 2009.
“Any lingering concern that India’s manufacturing recovery was tailing off should be put off. A second consecutive rise in PMI has taken the series to a new cycle high consistent on double digit rise in industrial production,” said Robert Prior Wandesforde, Senior Asian economist, HSBC.
The positive results come against the backdrop of Reserve Bank of India’s (RBI’s) decision last week to start tightening monetary policy by raising the cash reserve ratio 75 basis points. The central bank also expressed confidence in the robust rate of growth in industrial output.
According to latest government data, industrial output as measured by the index of industrial production (IIP) grew at a robust rate of 11.7 per cent in November.
Within the disaggregated data, the new export orders index showed a more than 5 point jump, the highest since October 2007.
“Production and new orders have both increased for ten straight months…domestic and foreign demand rose considerably since December. The improvement in external demand was noticeable, although total new business growth continued to increase at a rate above export orders,” said the report.
Companies reaped the benefit of increasing new orders which led them to step up their production levels. According to the HSBC Markit report, Indian manufacturers sharply raised their output levels during the month in line with the increase in new orders and the latest gains have been above the pre downturn averages.
“ The pick-up in exports is extremely heartening and it does point towards a sustainable trend of growth in manufacturing. Growth in industrial output will stay in double digits till the end of this financial year (2009-10) and the encouraging bit is that the composition of lead indicators of the economy are now becoming more and more broad- based,” said Jyotinder Kaur and economist with HDFC.
However, though manufacturing output has gathered momentum, the recovery in employment is yet to gain traction. The index showed a “slight” increase in industry employment in January on the back of higher production requirement and capacity constraints. Although weak, the report states that the increase in employment index was the strongest in almost a year and a half.
RBI hints at curbs on capital inflows
RBI hints at curbs on capital inflows
Economic Times, February 2, 2010, Page 1
Calls For Measures To Avoid Stark Economic Imbalances
Our Bureau MUMBAI
RBI governor Duvvuri Subbarao has for the first time said the nation “may have to take some measures towards capital control” in the short term to avoid stark economic imbalances after acknowledging in the past the role played by fund flows in worsening inflation, boosting asset prices and destroying industry competitiveness.
The governor has laid the foundation for possible action by drawing attention to the fact that most emerging markets face unprecedented flows that are pushing up commodity prices, asset prices and disturbing exchange rates to the disadvantage of local industry.
“All emerging market economies now believe that capital inflows will increase in the months ahead,” Mr Subbarao said in a teleconference on Monday, the first such event in RBI’s history. “If that happens, based on India’s growth prospects, it is possible that the inflows will be much beyond our current account deficit. In the medium term, it is our objective that India expand its capacity to absorb capital flows, but in the short term, should there be flows largely in excess of our current account deficit... we may have to take some measures towards capital control.”
The RBI governor and the government have been preparing the ground for some kind of action on capital inflows for some time now as $17 billion of funds flowing into Indian equities last year pushed up the rupee over 10% since March-end, making Indian exports lose out to Chinese rivals.
Tide seems to be turning
SOARING prices, mainly in real estate, are partly due to inflows.
The prospects of more than 8% GDP growth and government bond yields nudging 8% at a time when rates continue to be near-zero in developed markets are luring global funds. Finance secretary Ashok Chawla and Mr Subbarao in the past have acknowledged the potential problems due to inflows, but maintained that there was no cause for concern.
Now the tide seems to be turning.
“An implicit premise in the latest monetary policy announced by RBI is higher capital flows into India and the need to actively intervene in the markets; this has a bearing for liquidity in the local markets and hence we expect the central bank to be actively managing liquidity with an eye on the emerging capital flow situation,” said Hemant Mishr, head of global markets-South Asia at Standard Chartered Bank.
The central bank has been changing gears. “The endeavour in the EMEs will be to strengthen the recovery process without compromising on price stability and to contain asset price inflation stemming from large capital inflows,” RBI said in its economic review released on Thursday. It followed up with the same assertion while reviewing the monetary policy the next day saying, “sharp increase in capital inflows, above the absorptive capacity of the economy, may complicate exchange rate and monetary management”.
Although inflows have caused problems for policymakers in the past, it is a taboo to publicly state that they may be curbed. This is probably the first time since January 2005 that the RBI governor is talking about some measures to control capital flows. In 2005, governor YV Reddy had in a veiled manner suggested containing inflows, but later clarified he did not mean that. But recently, countries such as Taiwan and Brasil in a limited way have imposed what is popularly known, but disliked by many, as the Tobin Tax—a tax on a transaction to deter speculation. “What’s clear from the governor’s comments is that he is worried about higher government borrowing pushing up yields, which in turn could attract more capital,” said the head of treasury with a foreign bank.
There may not be a tax, or a blunt measure straightaway, but tinkering with many instruments as it has done in the past such as capping interest on NRI deposits, limiting foreign investment in corporate and sovereign debt, and directing the end use of funds raised overseas.
But the governor said he hasn’t made up his mind on which stick to beat with. “We will look at all those measures and also at what other emerging market economies are doing. We will learn from their experience,” he said.
Economic Times, February 2, 2010, Page 1
Calls For Measures To Avoid Stark Economic Imbalances
Our Bureau MUMBAI
RBI governor Duvvuri Subbarao has for the first time said the nation “may have to take some measures towards capital control” in the short term to avoid stark economic imbalances after acknowledging in the past the role played by fund flows in worsening inflation, boosting asset prices and destroying industry competitiveness.
The governor has laid the foundation for possible action by drawing attention to the fact that most emerging markets face unprecedented flows that are pushing up commodity prices, asset prices and disturbing exchange rates to the disadvantage of local industry.
“All emerging market economies now believe that capital inflows will increase in the months ahead,” Mr Subbarao said in a teleconference on Monday, the first such event in RBI’s history. “If that happens, based on India’s growth prospects, it is possible that the inflows will be much beyond our current account deficit. In the medium term, it is our objective that India expand its capacity to absorb capital flows, but in the short term, should there be flows largely in excess of our current account deficit... we may have to take some measures towards capital control.”
The RBI governor and the government have been preparing the ground for some kind of action on capital inflows for some time now as $17 billion of funds flowing into Indian equities last year pushed up the rupee over 10% since March-end, making Indian exports lose out to Chinese rivals.
Tide seems to be turning
SOARING prices, mainly in real estate, are partly due to inflows.
The prospects of more than 8% GDP growth and government bond yields nudging 8% at a time when rates continue to be near-zero in developed markets are luring global funds. Finance secretary Ashok Chawla and Mr Subbarao in the past have acknowledged the potential problems due to inflows, but maintained that there was no cause for concern.
Now the tide seems to be turning.
“An implicit premise in the latest monetary policy announced by RBI is higher capital flows into India and the need to actively intervene in the markets; this has a bearing for liquidity in the local markets and hence we expect the central bank to be actively managing liquidity with an eye on the emerging capital flow situation,” said Hemant Mishr, head of global markets-South Asia at Standard Chartered Bank.
The central bank has been changing gears. “The endeavour in the EMEs will be to strengthen the recovery process without compromising on price stability and to contain asset price inflation stemming from large capital inflows,” RBI said in its economic review released on Thursday. It followed up with the same assertion while reviewing the monetary policy the next day saying, “sharp increase in capital inflows, above the absorptive capacity of the economy, may complicate exchange rate and monetary management”.
Although inflows have caused problems for policymakers in the past, it is a taboo to publicly state that they may be curbed. This is probably the first time since January 2005 that the RBI governor is talking about some measures to control capital flows. In 2005, governor YV Reddy had in a veiled manner suggested containing inflows, but later clarified he did not mean that. But recently, countries such as Taiwan and Brasil in a limited way have imposed what is popularly known, but disliked by many, as the Tobin Tax—a tax on a transaction to deter speculation. “What’s clear from the governor’s comments is that he is worried about higher government borrowing pushing up yields, which in turn could attract more capital,” said the head of treasury with a foreign bank.
There may not be a tax, or a blunt measure straightaway, but tinkering with many instruments as it has done in the past such as capping interest on NRI deposits, limiting foreign investment in corporate and sovereign debt, and directing the end use of funds raised overseas.
But the governor said he hasn’t made up his mind on which stick to beat with. “We will look at all those measures and also at what other emerging market economies are doing. We will learn from their experience,” he said.
Imports rise 27%, confirm economy back on track
Imports rise 27%, confirm economy back on track
Economic Times, February 2, 2010, Page 9
22.4% Rise In Non-Oil Imports In Dec Reflects Manufacturing Growth
Our Bureau NEW DELHI
IMPORTS moved back to the positive terrain for the first time since the financial crisis, clocking a 27% growth in December, indicating that the domestic economy was well on its way to recovery, aided by rapidly improving exports that grew for the second successive month.
“Trade has now fallen in line with all other indicators of the economy that had already started improving,” said Crisil chief economist D K Joshi, adding that trade was the last indicator to improve as it is linked to the global economy. The strong 22.4% rise in non-oil imports, after a steady fall for more than a year, reflects an increase in manufacturing and investment activity in the country, as the bulk of imports is industrial inputs and capital goods.
Capital goods accounted for nearly 16% of imports in the year 2008-09.
The near double digit growth in exports in December 2009 from a year ago, albeit from a low base, suggests a demand pick-up in the Western markets, including both the EU and the US.
The pick up in exports should boost manufacturing and thereby the overall industrial growth, which was a strong 11.7% in November, 2009.
This (rise in non-oil imports) coupled with the recovery in exports bodes well for the growth momentum,” said Citi economists Rohini Malkani and Anushka Shah in a research note. The recently provided additional stimulus to labour-intensive export sectors that had not responded well to the packages announced earlier is also expected to contribute to positive growth.
“We believe that exports would keep moving uphill and we can touch $170 billion by the end of the fiscal,” said Ajay Sahai, director general, Federation of Indian Export Organisations (Fieo).
There is an increase in import of both capital goods for manufacturing in general and power equipment as the country is implementing a large number of power projects.
“This is a good sign as it indicates that manufacturing will continue to post a double digit growth that will ultimately result in a higher GDP,” Mr Sahai added.
Oil imports in December 2009 stood at $6.5 billion, 42.8% higher than $ 4.58 billion in the corresponding period last year. India’s exports had turned positive in October 2009 after falling continuously for 13 months. Imports, which had slipped into the negative territory a little later, took that much longer to recover and post a postive growth.
Due to a higher increase in imports in December 2009, the trade deficit widened to $10.1 billion, which is the highest since November 2008. Trade deficit for the nine month period narrowed to $76.2 billion, compared to $106 billion last year.
Economic Times, February 2, 2010, Page 9
22.4% Rise In Non-Oil Imports In Dec Reflects Manufacturing Growth
Our Bureau NEW DELHI
IMPORTS moved back to the positive terrain for the first time since the financial crisis, clocking a 27% growth in December, indicating that the domestic economy was well on its way to recovery, aided by rapidly improving exports that grew for the second successive month.
“Trade has now fallen in line with all other indicators of the economy that had already started improving,” said Crisil chief economist D K Joshi, adding that trade was the last indicator to improve as it is linked to the global economy. The strong 22.4% rise in non-oil imports, after a steady fall for more than a year, reflects an increase in manufacturing and investment activity in the country, as the bulk of imports is industrial inputs and capital goods.
Capital goods accounted for nearly 16% of imports in the year 2008-09.
The near double digit growth in exports in December 2009 from a year ago, albeit from a low base, suggests a demand pick-up in the Western markets, including both the EU and the US.
The pick up in exports should boost manufacturing and thereby the overall industrial growth, which was a strong 11.7% in November, 2009.
This (rise in non-oil imports) coupled with the recovery in exports bodes well for the growth momentum,” said Citi economists Rohini Malkani and Anushka Shah in a research note. The recently provided additional stimulus to labour-intensive export sectors that had not responded well to the packages announced earlier is also expected to contribute to positive growth.
“We believe that exports would keep moving uphill and we can touch $170 billion by the end of the fiscal,” said Ajay Sahai, director general, Federation of Indian Export Organisations (Fieo).
There is an increase in import of both capital goods for manufacturing in general and power equipment as the country is implementing a large number of power projects.
“This is a good sign as it indicates that manufacturing will continue to post a double digit growth that will ultimately result in a higher GDP,” Mr Sahai added.
Oil imports in December 2009 stood at $6.5 billion, 42.8% higher than $ 4.58 billion in the corresponding period last year. India’s exports had turned positive in October 2009 after falling continuously for 13 months. Imports, which had slipped into the negative territory a little later, took that much longer to recover and post a postive growth.
Due to a higher increase in imports in December 2009, the trade deficit widened to $10.1 billion, which is the highest since November 2008. Trade deficit for the nine month period narrowed to $76.2 billion, compared to $106 billion last year.
NAREDCO opens eastern region office in Bhubaneswar
NAREDCO opens eastern region office in Bhubaneswar
BS Reporter/Kolkata - Feb 02,2010 00:50 AM
National Real Estate Development Council (NAREDCO) under the Union Ministry of Housing and Urban Poverty Alleviation on Saturday opened its eastern regional office in the city. This is the fifth regional office of NAREDCO in the country after Mumbai, Hyderabad, Jaipur and Delhi.
NAREDCO's regional office in the city was inaugurated by Arun Panda, secretary, housing and urban development of the Orissa government in the presence of Sanjeev Srivastav, senior vice president, NAREDCO; D K Singh, vice chairman, BDA; Gadadhar Parida, commissioner, Bhubaneswar Municipal Corporation and R Nanda, vice chairman, Cuttack Development Authority.
BS Reporter/Kolkata - Feb 02,2010 00:50 AM
National Real Estate Development Council (NAREDCO) under the Union Ministry of Housing and Urban Poverty Alleviation on Saturday opened its eastern regional office in the city. This is the fifth regional office of NAREDCO in the country after Mumbai, Hyderabad, Jaipur and Delhi.
NAREDCO's regional office in the city was inaugurated by Arun Panda, secretary, housing and urban development of the Orissa government in the presence of Sanjeev Srivastav, senior vice president, NAREDCO; D K Singh, vice chairman, BDA; Gadadhar Parida, commissioner, Bhubaneswar Municipal Corporation and R Nanda, vice chairman, Cuttack Development Authority.
National Real Estate Development Council's Regional office inaugurated in Orissa
National Real Estate Development Council's Regional office inaugurated in Orissa
Saturday, January 30, 2010
Report by Dipti Ranjan Kanungo, Bhubaneswar:
The National Real Estate Development Council's Regional (East) office and Orissa Chapter of the council inaugurated here on Saturday by the Commissioner Cum Secretary of Housing and Urban Development Dr Arun Kumar Panda . The
inauguration ceremony tookplace at Hotel May Fair Lagoon in presence of more than 200 guests from all over the country.
NAREDCO's Regional office would promote the development of real estate throught Eastern and Northern India and shall act as an interface between central government and state government , local authorities and boards on one hand and regional real estate developers ,buyers ,financial instituations,banks, real estate agents on the other hand . It will also help in promoting the concepts of 'affordable housing' and 'sustainable development' in this region.Newly appointed Vice President of the Regional office (East) Mr Anup Mohapatra a renowned real estate czar from the state.
The Regional office at Bhubaneswar has just been inaugurated and rest of the regional offices will be established during remaining months of the first quarter of 2010.
Orissa Chapter of NAREDCO is jointly formed by the state government and the private sector enterprises involved in various facets of real estate development and operate at Orissa state. level as governed by NAREDCO constitution. The Chief Minister of the state would be the chief Patron and Secretaries of Ministries like Urban Development , Housing, LSG, and Finance would be the members of the Governing council of this state chapter. Housing Board, Development Authorities and other state bodies involved in housing and real estate development would also be the members along with real estate developers , housing finance institutions and brokerage firms working in Orissa.
Saturday, January 30, 2010
Report by Dipti Ranjan Kanungo, Bhubaneswar:
The National Real Estate Development Council's Regional (East) office and Orissa Chapter of the council inaugurated here on Saturday by the Commissioner Cum Secretary of Housing and Urban Development Dr Arun Kumar Panda . The
inauguration ceremony tookplace at Hotel May Fair Lagoon in presence of more than 200 guests from all over the country.NAREDCO's Regional office would promote the development of real estate throught Eastern and Northern India and shall act as an interface between central government and state government , local authorities and boards on one hand and regional real estate developers ,buyers ,financial instituations,banks, real estate agents on the other hand . It will also help in promoting the concepts of 'affordable housing' and 'sustainable development' in this region.Newly appointed Vice President of the Regional office (East) Mr Anup Mohapatra a renowned real estate czar from the state.
The Regional office at Bhubaneswar has just been inaugurated and rest of the regional offices will be established during remaining months of the first quarter of 2010.
Orissa Chapter of NAREDCO is jointly formed by the state government and the private sector enterprises involved in various facets of real estate development and operate at Orissa state. level as governed by NAREDCO constitution. The Chief Minister of the state would be the chief Patron and Secretaries of Ministries like Urban Development , Housing, LSG, and Finance would be the members of the Governing council of this state chapter. Housing Board, Development Authorities and other state bodies involved in housing and real estate development would also be the members along with real estate developers , housing finance institutions and brokerage firms working in Orissa.
Naredco to open regional office
Naredco to open regional office
By Express News Service
29 Jan 2010 05:05:00 AM IST
BHUBANESWAR: National Real Estate Development Council (NAREDCO) of the Union Ministry of Housing and Urban Poverty Alleviation is all set to open its Regional Office (East) and launch the Orissa chapter of the Council in Bhubaneswar on Saturday. It would be the fifth regional office in the country after Mumbai, Hyderabad, Jaipur and Delhi.
As the nodal agency for housing and real estate sector in India, Naredco’s activities range from legislative, legal and regulation issues to commercial ones. The Bhubaneswar regional office would benefit all stakeholders of the sector from buyers, financial institutions, banks, Government, realtors, etc, operating in the Eastern and North- Eastern states. It would have jurisdictional control over Orissa, Bihar, West Bengal, Sikkim and North-East states.
© Copyright 2008 ExpressBuzz
By Express News Service
29 Jan 2010 05:05:00 AM IST
BHUBANESWAR: National Real Estate Development Council (NAREDCO) of the Union Ministry of Housing and Urban Poverty Alleviation is all set to open its Regional Office (East) and launch the Orissa chapter of the Council in Bhubaneswar on Saturday. It would be the fifth regional office in the country after Mumbai, Hyderabad, Jaipur and Delhi.
As the nodal agency for housing and real estate sector in India, Naredco’s activities range from legislative, legal and regulation issues to commercial ones. The Bhubaneswar regional office would benefit all stakeholders of the sector from buyers, financial institutions, banks, Government, realtors, etc, operating in the Eastern and North- Eastern states. It would have jurisdictional control over Orissa, Bihar, West Bengal, Sikkim and North-East states.
© Copyright 2008 ExpressBuzz
Government to introduce new slum policy
Government to introduce new slum policy
By Express News Service
31 Jan 2010 05:50:00 AM IST
BHUBANESWAR: The State Government is all set to introduce a new policy and strategy on slum-dwellers soon.
Calling the builders to take advantage of various schemes of the Centre towards providing low-cost housing for the economically weaker sections, middle class and urban poor, Urban Development Secretary Arun Kumar Panda today said while thinking about profit margins from big projects, the realtors must come forward with unique and low-cost projects to help the needy.
Speaking at the inauguration of fifth regional office of National Real Estate Development Council (NAREDCO) here, Panda said a trust building atmosphere between the people and the realtors must be developed in the region.
He also advised stakeholders of NAREDCO to bring new ideas and suggestions to the notice of the Government so that a proper road map can be laid and a time line is set to address housing problems in the Capital and other emerging urban pockets of the State.
As recognition to its growth status and future potential in the entire eastern region, the Temple City today got the opportunity to have a regional centre of NAREDCO after Mumbai, Hyderabad, Jaipur and New Delhi. The Orissa Chapter of the national body was also inaugurated on the occasion.
BDA vice-chairman DK Singh said as according to the new comprehensive development plan of the city, a tremendous potential is likely to be tapped by stakeholders involved in urban housing, NAREDCO can be the proper platform to build a credible interface in this regard.
While BMC Commissioner Gadadhar Parida hinted at making the Capital a slum-free zone by adopting a proper planning for 377 habitations, his Cuttack counterpart RN Nanda said quality control must be the new mantra for builders.
Vice-president, NAREDCO eastern chapter, Anup Mohapatra called for a better coordination among all stakeholders.
NAREDCO president Rohtas Goel spoke.
© Copyright 2008 ExpressBuzz
By Express News Service
31 Jan 2010 05:50:00 AM IST
BHUBANESWAR: The State Government is all set to introduce a new policy and strategy on slum-dwellers soon.
Calling the builders to take advantage of various schemes of the Centre towards providing low-cost housing for the economically weaker sections, middle class and urban poor, Urban Development Secretary Arun Kumar Panda today said while thinking about profit margins from big projects, the realtors must come forward with unique and low-cost projects to help the needy.
Speaking at the inauguration of fifth regional office of National Real Estate Development Council (NAREDCO) here, Panda said a trust building atmosphere between the people and the realtors must be developed in the region.
He also advised stakeholders of NAREDCO to bring new ideas and suggestions to the notice of the Government so that a proper road map can be laid and a time line is set to address housing problems in the Capital and other emerging urban pockets of the State.
As recognition to its growth status and future potential in the entire eastern region, the Temple City today got the opportunity to have a regional centre of NAREDCO after Mumbai, Hyderabad, Jaipur and New Delhi. The Orissa Chapter of the national body was also inaugurated on the occasion.
BDA vice-chairman DK Singh said as according to the new comprehensive development plan of the city, a tremendous potential is likely to be tapped by stakeholders involved in urban housing, NAREDCO can be the proper platform to build a credible interface in this regard.
While BMC Commissioner Gadadhar Parida hinted at making the Capital a slum-free zone by adopting a proper planning for 377 habitations, his Cuttack counterpart RN Nanda said quality control must be the new mantra for builders.
Vice-president, NAREDCO eastern chapter, Anup Mohapatra called for a better coordination among all stakeholders.
NAREDCO president Rohtas Goel spoke.
© Copyright 2008 ExpressBuzz
Subscribe to:
Posts (Atom)
Posts
