June 10th, 2012

Eurozone agrees to lend Spain up to 100bn euros:


Euro zone finance ministers agreed on Saturday to lend Spain up to 100 billion euros to shore up its teetering banks and Madrid said it would specify precisely how much it needs once independent audits report in just over a week.
After a 2 1/2-hour conference call of the 17 finance ministers, which several sources described as heated, the Eurogroup and Madrid said the amount of the bailout would be sufficiently large to banish any doubts.
"The loan amount must cover estimated capital requirements with an additional safety margin, estimated as summing up to 100 billion euros in total," a Eurogroup statement said.
Spain said it wanted aid for its banks but would not specify the precise amount until two independent consultancies - Oliver Wyman and Roland Berger - deliver their assessment of the banking sector's capital needs some time before June 21.
"The Spanish government declares its intention to request European financing for the recapitalisation of the Spanish banks that need it," Economy Minister Luis de Guindos said at a news conference in Madrid.
He said the amounts needed would be manageable and that the funds requested would amply cover any needs.
Euro zone crisis in graphics http://r.reuters.com/hyb65p
A bailout for Spain's banks, beset by bad debts since a property bubble burst, would make it the fourth country to seek assistance since Europe's debt crisis began.
With the rescue of Greece, Ireland, Portugal and now Spain, the EU and IMF have now committed around 500 billion euros to finance European bailouts.
Washington, which is worried the euro zone crisis could drag the U.S. economy down in an election year, welcomed the announcement.
"These are important for the health of Spain's economy and as concrete steps on the path to financial union, which is vital to the resilience of the euro area," US Treasury Secretary Timothy Geithner said.
Likewise, the Group of Seven developed nations - the United States, Germany, France, Britain, Italy, Japan and Canada - heralded the move as a milestone as the euro zone moves toward tighter financial and budgetary ties.
HEATED DEBATE
Officials said there had been a heated debate over the International Monetary Fund's role in Spain's bank rescue, which Madrid wanted kept to a minimum. The IMF will not provide any of the money.
In the end it was agreed that the IMF would help monitor reforms in Spain's banking sector, while EU institutions would ensure Spain stuck to its broader economic commitments.
IMF Managing Director Christine Lagarde said the euro zone's plan was consistent with the IMF's estimate of the capital needs of Spain's banks and should provide "assurance that the financing needs of Spain's banking system will be fully met."
Sources involved in the talks said there had been pressure on Madrid to make a precise request right away, but Spain had resisted.
Euro zone policymakers are eager to shore up Spain's position before June 17 elections in Greece which could push Athens closer to a euro zone exit and unleash a wave of contagion. Spain's auditors could report back after that date.
Nonetheless, analysts said financial markets may be calmed by the announcement when they reopen on Monday.
"The figure of up to 100 billion is more encouraging and pretty realistic; it's an attempt to cap the problem," said Edmund Shing, European head of equity strategy at Barclays.
"The issue, however, is there is still a lack of detail about where the money's coming from, which is crucial. The market will treat it with some caution until they see how it will be funded."
The Eurogroup said the funds could come from either from the euro zone's temporary rescue fund, the EFSF, or the permanent mechanism, the ESM, which is due to start next month. Finland said that if money came from the EFSF, it would want collateral.
EU sources said there was a preference to channel money to Spain through the ESM, rather than the EFSF. Under the ESM, an approval rate of 90% or less is needed to trigger aid, and the fund also has more flexibility in how it operates.
"That's why it's so important that the ESM ... be ratified quickly," German Finance Minister Wolfgang Schaeuble said.
The Spanish government has already spent 15 billion euros bailing out small regional savings banks that lent recklessly to property developers. Spain's biggest failed bank, Bankia , will cost 23.5 billion euros to rescue and its shareholders have been wiped out.
"Whatever the formula being used, we need to say two things: first the innocent should not suffer for the guilty, second public money should come back to public coffers," said Socialist opposition chief Alfredo Perez Rubalcaba after speaking with Prime Minister Mariano Rajoy on Saturday morning.
Light Conditions
The race to resolve the banks' troubles comes after Fitch Ratings cut Madrid's sovereign credit rating by three notches to BBB, highlighting the Spanish banking sector's exposure to bad property loans and to contagion from Greece's debt crisis.
It said the cost to the Spanish state of recapitalising banks stricken by the bursting of a real estate bubble, recession and mass unemployment could be between 60-100 billion euros.
Italy could yet get dragged in too. Its industry minister, Corrado Passera, said the economic situation in Italy had improved since the end of 2011, but remained critical.
"Europe was more disappointing than we had expected, it was less capable of tackling a relatively minor problem such as Greece," Passera told a conference on Saturday.
While Spain would join Greece, Ireland and Portugal in receiving a European financial rescue, officials said the aid would be focused only on its banking sector, without taking the Spanish state out of credit markets.
That would be crucial to avoid overstraining the euro zone's rescue funds, which would struggle to cover Spanish government borrowing needs for the next three years plus possible additional assistance for Portugal and Ireland.
Conditions in the plan did not appear to add to the austerity measures and structural economic reforms which Rajoy's government has already put in place.
"Since the funds being asked for are to attend to financial sector needs, the conditionality, as agreed in the Eurogroup meeting, will be specifically for the financial sector," de Guindos said.
EU and German officials have cited national pride in the euro zone's fourth largest economy as a barrier to requesting a full assistance programme.
The European Commission and Germany both agreed in principle last week that Spain should be given an extra year to bring its budget deficit down below the EU limit of 3% of gross domestic product because of a deep recession.
The Eurogroup also said money could be funnelled to Spain's FROB bank fund although the government would "retain the full responsibility of the financial assistance".
Irish Finance Minister Michael Noonan said the funds would be provided through the EFSF or ESM at the same interest rates that apply to funds provided to other bailout countries.


China May exports up 15.3%YoY, surplus $18.7 bln:


China's exports grew 15.3% in May from a year earlier, the customs administration said on Sunday, much stronger than market expectations for a 6.8% increase and up from April's rise of 4.9%.
The annual growth of 12.7% in imports last month also exceeded expectations for a 5.% increase in a Reuters poll and were well above the 0.3% annual rise in April.
That left the country with a trade surplus of USD 18.7 billion in May, compared with a forecast of USD 16.2 billion and April's USD 18.4 billion.

Buffett charity lunch auctioned for $3.46 mln:

A typical lunch at a high-end Manhattan steakhouse for nine people might run $1,000 or so, but when Warren Buffett is the guest of honor the price can rise to $3.46 million.
That is how much an as-yet unknown bidder paid in the annual online charity auction for the right to lunch with the "Oracle of Omaha" and seven friends at the Smith & Wollensky steakhouse in Manhattan.
The proceeds were up compared to last year, when fund manager Ted Weschler bid $2.63 million to have lunch with Buffett. The 81-year-old Nebraska billionaire ended up hiring Weschler last September to be an investment manager at Berkshire Hathaway.
A total of 10 bidders entered 106 bids over the five-day auction that ended on Friday evening, much stronger than last year when just two people made a total of eight bids. The winning offer was exactly $3,456,789.
The previous 12 auctions raised more than $11.5 million for the San Francisco-based charity GLIDE, which sponsors a variety of programs for the disadvantaged, from meals for the needy and housing to community clinics. Buffett was introduced to GLIDE via his late first wife Susan.

Source: www.moneycontrol.com

April 12, 2012

Feb IIP growth at 4.1%, CSO revises Jan nos down to 1.1%:

The growth in February industrial production (IIP) has come in at 4.1%, which is an improvement over the January number. The January IIP number has been revised to 1.1% from 6.8% (provisional). The Central Statistical Organization revised January IIP figure after it spotted an error in sugar output numbers. Based on the January provisional numbers, a CNBC-TV18 poll had estimated February IIP growth flat at 6.7% .
Manufacturing output, which constitutes nearly 76% of total industrial production, declined to 4% versus 7.5% year-on-year. Mining sector growth, which has been been underperforming for a while, has come in at 2%. Capital goods index at 10.6% is an improvement month-on-month. Consumer non-durables growth in February stands at 5%.
Core sector, which contributes almost 38% to industrial production, grew by a sharp 6.8% in February from a year earlier. Core sector comprises key infrastructure industries of coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity.
Economists and market experts speaking to CNBC-TV18 said all indicators point towards a slow down that makes a case for repo rate cut in the Reserve Bank's monetary policy on April 17. This hope was refelected in bonds that rallied after the February numbers were released; consequently rupee fell marginally. The stock market barely reacted to the February industrial output numbers.
There is a concern on falling manufacturing growth. MS Unnikrishnan, MD, Thermax is worried that the situation is going to be worse in the subsequent quarters. "If the RBI does not intervene very quickly, the manufacturing sector is going to show negative numbers in Q1,Q2 and Q3 of FY13. It is a very alarming situation for the industry at this point in time," he said.
Sector-wise IIP data
Manufacturing sector growth at 4% Vs 7.5% (YoY)
Capital goods growth at 10.6% Vs -5.7% (YoY)
Consumer non-durable goods growth at 5.1%
Mining sector growth at 2.1% Vs 1.2% (YoY)
Electricity growth at 8%
Basic goods growth at 7.5% Vs 5.5% (YoY)
Intermediate goods growth at -0.6% vs 6.3% (YoY)
Consumer durable goods growth at -6.7% vs 18.2% (YoY)
What will be RBI's stance in its monetary policy review?
Gaurav Kapur, Senior Economist, Royal Bank of Scotland is expecting the RBI to cut the repo rate by 25 basis points on Tuesday.
He explains, "I think the bond market at this point could have a lot more confidence that the RBI would actually cut rates because the next key number of inflation is likely to be lower than 7% which is what the RBI has been indicating for the month of March. So going by that this would bolster the case for a rate cut. I think the January number did not provide any sense of comfort on the fact that growth has indeed been slowing down."
Agrees Shubhada Rao, Chief Economist, Yes Bank that the RBI has a tough task in hand now post dismal January IIP data. She, however, points out that the data is quite noisy and RBI refers to two "three other source of data as well while considering its monetary policy review.
"A lot of noisy data goes into the GDP numbers as well like a capital goods number would go into gross fixed capital formation data and so on. However, it is clear that that there is a decline pace of economic activity," she adds.
Echoing a similar sentiment, Mohan Shenoi, Treasurer, Kotak Mahindra Bank feels that the market is expecting a 25 basis points rate cut on April 17.
Bond yields
According to Shenoi, bond yield could go down to 8.35% or so but may not be sustainable at those levels because the supply pressure had still not gone off.
"In the last one week, the global financial markets were on risk-off mode and for the first time today they are on risk-on mode. We have to see whether this risk-on will continue for sometime or whether it will switch back to risk-off because that also has an impact on our bond market through the oil prices," he elaborates.

Unitech closes 4.42% up after winning case against Telenor:

Shares of Unitech surged over 6% in trade on Thursday after CNBC-TV18 reported that the real estate developer has won a case against its JV partner Telenor in Company Law Board (CLB).
Unitech and its estranged telecom partner Norway's Telenor last month had exchanged proposals inside the closed chambers of the CLB Chairman on probable sale or purchase of shares in their joint venture company Uninor.
Unitech counsels during argument told CLB that Telenor, which holds majority stake in Uninor, had invoked arbitration under Share Subscription Agreement to seek damages and indemnity, but was rescinding Share Holders Agreement.
Telenor which holds about 67.25% stake in Uninor has held Unitech responsible for the breach of warranties related to the cancellation of JV firm licences by Supreme Court and wants to the realty from Uninor after the verdict. It has served notice to Unitech for indemnity claim.
Unitech's move to seek Arbitration has been opposed by Telenor and Uninor. Telenor Counsel in CLB has earlier argued that Unitech has no right to seek arbitration as they have filed petition before the CLB.
Citing various judgements and court cases, Telenor counsel has said once plaintiff files a suit, it has no right to refer the case for arbitration.
However, Unitech counsel contested some of the judgements that were cited by Telenor and said that the situation in cases cited by Norwegian firm are not similar to that of ongoing case between Unitech and Telenor at CLB. The counsel further argued that the arbitration application made by Unitech is indication that company has willingness to seek arbitration and depends on the decision of court.
Sources say Telenor’s plan to buy Unitech for Re 1 gets thwarted with the CLB order. Now, the matter will be decided via arbitration, which will be fair but a lengthy process.
"While (we) will now consider our next legal options, it is very clear that Telenor Group will do all that is necessary to secure the future of Uninor's employees, customers and partners," a Telenor spokesman said in a statement to Reuters.
Telenor will have to resolve this before they get new partner as proposed. Asserting that it is in India for a long-haul race, Norway-based Telenor Group declared that it would indeed participate in the Supreme Court-ordained auction for the 2G spectrum by teaming up with a yet-to-be identified new local partner. It would have a majority 74% in the still-to-be-formed new company.
The Norwegian Group had already moved the Foreign Investment Promotion Board (FIPB) seeking approval for its proposed new joint outfit and investment.
Has Unitech really won?
Though the news comes as a big relief to the beleaguered realty major, however, investment analyst SP Tulsian is not too excited about the development.
"Firstly, Unitech wanted USD 150 million for their 32-33% stake in the telecom company, while the foreign partner Telenor was offering peanuts. So, I don’t know whether now the matter will be referred to the arbitration, which can be heard only in the Singapore or in the overseas court, which itself will be a very expensive, and long drawn process," he told CNBC-TV18 in an interview.
Unitech shares ended trade up 4.42% at Rs 29.55 a piece.

Mitsui Sumitomo to Buy 26% Stake in India’s Max New York Life:

MS&AD Insurance Group Holdings Inc. (8725), Japan’s biggest casualty insurer, will buy a 26 percent stake in Max New York Life Insurance Co. from the owners of the closely held venture in India.
Mitsui Sumitomo Insurance Co., a unit of MS&AD, will purchase 16.63 percent from New York Life Insurance Co. and 9.37 percent from Max India Ltd. (MAX), the Indian company said in a statement to the stock exchange today. The statement didn’t disclose the total value of the transaction. The deal is valued at about 27 billion rupees ($531 million), according to two people familiar with the sale.
Enlarge image
MS&AD Insurance Group Holdings Inc., Japan’s biggest casualty insurer, plans to buy a 26 percent stake in Max New York Life Insurance Co. for about 27 billion rupees ($531 million), according to two people familiar with the transaction. Photographer: Sanjit Das/Bloomberg
MS&AD, formed in 2010 through a merger of Mitsui Sumitomo Insurance, Aioi Insurance Co. (8761) and Nissay Dowa General Insurance Co., has been turning to foreign markets and cutting costs in Japan as the nation’s stagnant economy and declining population damp demand. The insurer is targeting profit of 30 billion yen for its overseas businesses, compared with 12 billion yen in the last fiscal year ended March 31.
“MS&AD has been saying they want to expand the life insurance business in Asia, so this isn’t a big surprise,” said Ayako Nakajima, an analyst at Standard & Poor’s in Tokyo. “India is an emerging market where you can bet on the potential for growth, but at the same time, it’s not a mature market like Japan’s so there are risks that need to be closely monitored.”
Yuki Fujikawa, a spokesman at MS&AD, confirmed earlier today that the insurer is in talks.
Stock Falls
New York Life will exit the Indian life insurance market upon completion of the sale, the people said. The deal is expected to close in the second half of the year, they said.
The deal will be entirely in cash and represents a multiple of 3.3 times so-called embedded value, or net assets plus the present value of future profits, as of March 31, 2011, the people said.
MS&AD shares declined 1 percent to 1,560 yen at the close on the Tokyo Stock Exchange. MS&AD shares have gained 9.4 percent this year. Shares of Max India headed for their biggest gain since June 2011 in Mumbai trading, rising 6.6 percent to 200.65 rupees.
Citigroup Inc. was the financial adviser to Mitsui Sumitomo, according to the people. Godwin Chellam, a Hong Kong- based spokesman at Citigroup, declined to comment.
Max New York is a joint venture between Max India, which invests in health care and technology, and New York Life, the biggest U.S. life insurer owned by policyholders. The U.S. insurer holds 26 percent of the venture, the maximum possible under current regulations.
Overseas Expansion
Max New York Life reported an 8 percent increase in revenue to 44.7 billion rupees for the nine months ended Dec. 31, according to a company statement on Business Wire India. Assets under management grew 18 percent to 153.57 billion rupees over the same period in fiscal 2010, the company said.
MS&AD is not alone in trying to expand abroad to grapple with a shrinking domestic market. In December, Tokio Marine Holdings Inc. (8766), Japan’s second-largest non-life insurer, agreed to buy Delphi Financial Group Inc. for $2.7 billion in its biggest acquisition in three years after buying Philadelphia Consolidated Holding Corp. in 2008 for $4.7 billion.
The purchase will allow MS&AD to have a foothold in India through the nation’s seventh-largest insurer, as the Japanese insurer expands its business in emerging Asian markets, the Nikkei newspaper reported earlier.

Maruti’s Ertiga will blow you away with its low price:


The shockingly affordable pricing of Maruti Suzuki‘s first multi-purpose vehicle (MPV), the Ertiga, betrays the company’s anxiousness to succeed in a segment it has never played in before.

The base petrol version of the car is priced at just Rs 5.89 lakh, ex-Delhi. This is much lower than the Toyota Innova’s base price of Rs 8.7 lakh and Mahindra Xylo’s base price of Rs 7.44 lakh (Toyota and Mahindra prices as per www.carwale.com).

Though Managing Executive Officer (Sales & marketing) Mayank Pareek was at pains to explain on Thursday that the Ertiga was in a segment by itself and cannot be compared to either the Innova or the Xylo or any other MUV available in the Indian market right now, Maruti’s cautious pricing shows the company has high hopes that the Ertiga will do in the MPV segment what the Swift did in the super hatch segment in 2005.

Maruti Ertiga. Image courtesy Maruti Suzuki India
The Ertiga is coming when Maruti has closed 2011-12 battered and bruised – its market share has fallen below the 40 percent mark for the first time in memory. Though the decline (it was about 44 percent in the previous fiscal) was largely attributed to production constraints for much of the year, some of it is also because of sales remaining lukewarm in critical models such as the Alto.

Pareek denied the company had any plans to lower prices of its mini cars to boost sales and said Ertiga was launched keeping the growth of the MUV segment in mind. He said this segment accounts for 14 percent of the overall car market and has seen compounded annual growth rates of 20 percent for the last three years. For now, Maruti has also dismissed any suggestions that it is slowly expanding its portfolio away from small cars.

Maruti has spent Rs 410 crore in developing the Ertiga, which is based on the Swift platform. The 7-seater is a bit smaller in length than both Xylo and Innova, with a length of 4,265 mm and height of 1,685 mm. The car comes in three petrol and three diesel options and Maruti claims its fuel efficiency is the best in class – 16.02 kmpl for the petrol variant and 20.77 kmpl for the diesel variant. The K14 petrol engine has a displacement of 1,400 cc while the diesel is 1,300 cc. So the Ertiga is a bit shorter, a bit less wider than competitors and also boasts of a smaller turning radius of 5.2 metres.

The pricing is introductory for now and is likely to increase after some months, but by then Maruti would have tested the market and response of competitors to this offering. Pareek said Ertiga is anyway not targeted at the taxi segment – where a lot of sales for the Innova and the Xylo come from. It is meant for the urban family of 3-5 people, for use in daily commutes and for long weekend drives. This is the first Maruti car which has been developed keeping Indian customers and road conditions in mind.

In fact, India is the first launch market for the Ertiga and completely knocked down (CKD) kits manufactured here would be exported to South-East Asian countries – CKD exports have already begun with Indonesia.

Maruti said it has flexible manufacturing and, therefore, can handle volume fluctuations on account of domestic market vagaries as well as export demands.

The high-end variants of Ertiga come with features like electronic power steering, power windows, steering-mounted audio controls, a high-end stereo system, air conditioning and heating with blowers for the second row of seats as well and safety features such as ABS, EBD and two front airbags.

Mar 30, 2012

Govt short-term borrow limit at Rs 50Kcr in April-Jun: RBI:

The government can borrow up to Rs 50,000 crore from the Reserve Bank of India during April-June as short-term loans and up to Rs 45,000 crore during July-September, the central bank said in a statement on Friday.
The RBI will charge an interest rate of 8.50%, its repo rate, on its ways and means (WMA) loans. And, any overdraft for the government will attract an interest of 2% above the repo rate, the RBI said.
The central bank may also float market loans when the government utilizes 75% of the WMA limit.

Source: www.moneycontrol.com

No tax liability on P-notes holders: Pranab Mukherjee:

Holders of participatory notes, or P-notes, will have no tax liability and a clarification on these notes will be

issued in due course, finance minister Pranab Mukherjee said on Friday.

"The Indian tax authorities would examine the tax liability of the said financial institutional investors (FIIs).

However, the tax authorities would not go beyond the FIIs to check any further detail about the participatory

notes holders," Mukherjee told reporters.

"Accordingly, the question of liability for tax in India of participatory note holders would not arise."

P-notes are issued by foreign portfolio investors registered with the Indian market regulator, or by their sub-

accounts, to investors overseas and they offer the buyer anonymity.

A lack of clarity on taxation of P-notes has contributed to the recent volatility in the domestic share market.

Source: www.moneycontrol.com


Tribunal puts $12 billion POSCO plant in limbo:

A tribunal on Friday suspended the environmental licence for POSCO's $12 billion steel project in Orissa,

India's biggest foreign direct investment, in a fresh blow to business confidence in Asia's third-largest

economy.

"The National Green Tribunal has suspended the environment clearance," environmental lawyer Ritwick Dutta

with activist group Green Panel told Reuters.

South Korea's POSCO signed the agreement for the mill in 2005 and was scheduled to begin production by

the end of 2011. Protests, environmental concerns and government inquiries into alleged illegalities at a related

mining concession have delayed it.

POSCO (005490.KS) spokesman Chung Jae-woong in Seoul said he could not immediately comment on the

ruling and it was not clear if the company would appeal. POSCO said it had received no official notification of

the court's decision.

Foreign firms vying for a place in one of the world's fastest-growing markets have been rattled by a series of

decisions and policies governing investment in recent months, including the cancellation of more than 100

telecoms licenses by India's Supreme Court hearing a corruption case.

The setback for the South Korean steelmaker, the world's third largest, came just days after Prime Minister

Manmohan Singh told a group of CEOs in Seoul his country was a stable location for their money.

On a state visit to South Korea this week, Singh tried to convince more Korean businesses to invest in India

despite the recent dents to investor confidence.

"The government is keen to move forward with the POSCO project," Singh told the business leaders on

Monday. "I believe that India is a stable and profitable long-term investment opportunity. I urge Korean

industry to have faith in India," he said.

Environmental groups have long complained that POSCO's plant would destroy large areas of forest in the

poor state and would hurt the livelihoods of indigenous tribes in the area.

Dutta said there were serious discrepancies in the way the government issued a conditional approval for the

project last year.

The company said it would build a 12 million tonne-per-year mill. Dutta said that was three times the size of

project approved by the environment ministry.

"Strangely enough the environmental impact assessment studies are done only for a 4 million tonne project,"

the lawyer told the CNN-IBN television station.

POSCO is seeking to expand overseas as it faces a growing threat from home rival Hyundai Steel, challenging

POSCO's dominance in high-end steel used in autos and ships.

Source: www.in.reuters.com


BoP slips into red, seen improving in 2012/13:

India's balance of payments (BoP) slipped into negative territory for the first time in three years as expected in the three months through December on shrinking dollar inflows, while the country's current account deficit widened further.

The final quarter of 2011 was marked by risk aversion among global investors as well as a worsening Indian economy and surging fiscal deficit, which crimped inflows.

Analysts expect the BoP to improve going into the next fiscal year, starting in April, on expectations that dollar inflows will pick up.

"We are looking at a BoP surplus of $5.5 billion for 2012/13. Foreign fund flows may be slightly more stable," said Anubhuti Sahay, an economist at Standard Chartered Bank in Mumbai.

"But obviously there is a risk to this number. If inflation turns out to be more sticky that what we are expecting now, and the RBI's rate cuts are lower than expected, it will have an impact."

The balance of payments deficit during October-December was $12.8 billion, compared with a surplus of $4 billion a year earlier. It had last been in the red in the December quarter of 2008, soon after the Lehman crisis.

"India's BoP experienced a significant stress as trade deficit widened and capital inflows fell far short of financing requirement resulting in significant drawdown of foreign exchange reserves," the Reserve Bank of India said in a statement on Friday.

The country's current account deficit was $19.6 billion in the December quarter, higher t han $9.7 billion a year earlier. The deficit has been widening steadily since the start of the fiscal year in April as exports slumped and imports rose.

For the December quarter, the current account deficit was 4.3 percent of the gross domestic product, up from 4.1 percent in the previous quarter.

Rising global oil prices pushed up import bills for Asia's third-largest economy, which sources more than 80 percent of its oil overseas.

Foreign funds invested $8.05 billion in 2011, sharply lower than the $39.2 billion in the previous year.

Earlier in the month, Nomura forecast a BoP deficit of about $10 billion for the Oct-Dec period on lower foreign fund inflows and weak export demand.

In mid-December, the Indian rupee plunged to a record low of 54.30 to the dollar as investors grew worried about the global economy, raising the prospect of further capital outflows from emerging markets.

India's financial account surplus stood at $20.9 billion in the December quarter compared with $9.9 billion a year earlier. It stood at $17.9 billion in the previous quarter.

The financial account includes, among other items, foreign direct investment and portfolio investment as well as overseas borrowing by Indian companies.

Source: www.in.reuters.com

Govt collects Rs. 6.97 lakh cr in tax during Apr-Feb:

The government on Friday said it has collected over Rs. 6.97 lakh crore in direct and indirect taxes between April and February of this fiscal.
While about Rs. 3.69 lakh crore was collected in direct taxes, over Rs. 3.28 lakh crore was mopped up through indirect taxes up to February


2012, Minister of State for Finance S S Palanimanickam said in a written reply to the Lok Sabha.
In Budget 2011-12, the government had estimated that it would collect Rs. 5.33 lakh crore during the fiscal through direct taxes, the number was later revised to 5 lakh crore.

The Budget estimate for indirect tax collection was Rs. 3.97 lakh crore which was later scaled to Rs. 3.98 lakh crore.

To a query if there was a shortfall in the collection, Palanimanickam said: "Since, the financial year has not ended, whether there will be a shortfall against revised estimate 2011-12 cannot be said at this stage."

He added that the contribution of Customs, Central Excise and Service tax in total indirect tax collection during April 2011 to February 2012 was Rs. 1.35 lakh crore (41.1%), Rs. 1.16 lakh crore (35.3%) and Rs. 77, 529 crore (23.6%), respectively.

Source: www.hindustantimes.com


India’s April-Feb fiscal deficit at $96.8 bn:

India’s fiscal deficit during April to February was Rs. 4.94 trillion ($96.8 billion), or 94.6% of the revised full fiscal year 2011/12 target, government data showed on Friday.

During the same period in the last fiscal year, the deficit was 68.6% of the budgeted target.

Net tax receipts were Rs. 4.94 trillion and total expenditure was Rs. 11.07 trillion during the April-February period.

Earlier this month, the government revised up the fiscal deficit target for the 2011/12 fiscal year to 5.9% of GDP from 4.6% projected earlier.

Source: www.livemint.com

Sonia Gandhi, Manmohan Singh knew about Tatra deal: Karnataka leader:

Prime Minister Manmohan Singh, President Pratibha Patil, Congress President Sonia Gandhi and Defence Minister AK Antony were aware of the Tatra-Bharat Earth Movers Limited deal in which kickbacks were taken, claims a Karnataka leader. D Hanumanthappa, president of the Karnataka wing of All India Federation of SC/ST/Backward Class and Minority Employees Welfare Association, said that he had written a letter in 2009 to the Prime Minister and the President about the deal, which is currently under investigation by the Central Bureau of Investigation (CBI).

Hanumanthappa claimed that he had sent copies of his letter to Sonia and Antony as well with the Congress President asking senior Congress leader and Union Minister for Health & Family Welfare Minister Ghulam Nabi Azad to forward the letter to concerned department.

Claiming that he wants to save democracy and make the country's defence forces stronger, Hanumanthappa said that he wrote about the Tatra-BEML deal in detail.

A press release by the Defence Ministry on Friday said that after receiving a letter from Azad in October 2009, forwarding the complaints of Hanumanthappa, Antony had asked the Secretary (Defence Production) to look into the various issues raised in the complaint.

"A day after receiving a letter from Shri Ghulam Nabi Azad, on 05 Oct 2009, forwarding the complaints of Dr. D Hanumanthappa, addressed to Congress President Smt. Sonia Gandhi on BEML, the Defence Minister Shri AK Antony had asked the Secretary (Defence Production) to look into the various issues raised in the complaint. Records show that the vigilance wings of MoD and BEML are examining the matter and there are also correspondence between the CBI and Chief Vigilance Officer of BEML on these allegations. Meanwhile, the Defence Minister has accorded his sanction for a CBI investigation on 21 Feb 2012 in another case relating to BEML, much before a newspaper report was published on 26 Mar 2012," the statement released by Defence Ministry spokesperson Sitanshu Kar said.


Source: www.ibnlive.in.com

BRICS bourses start cross-listing:

Aiming to expand their product offerings beyond home markets, five of the world's leading emerging market indices, have started to cross-list derivative indices from today.

Accordingly, Brazil's IBOVESPA futures; Russia's MICEX Index futures; Hong Kong's Hang Seng Index futures; and South Africa's FTSE/JSE Top40 futures got listed on the BSE.

Price bands for the benchmark equity index derivatives will be same as that applicable for the existing stock index futures contracts, BSE said.

It added that the derivatives contracts on these foreign stock indices shall also be denominated, traded and settled in Indian Rupees.

BSE further noted that exchange transaction charges for trades done by trading members on these futures contracts shall be waived off for a period of 6 months from commencement (till September 30, 2012).

The cross-listing of benchmark equity index derivatives is likely to facilitate liquidity growth in the BRICS markets and will considerably strengthen their international position.

Source: www.financialexpress.com

India Current Account Deficit Nearly Doubles:

India's October-December current account deficit nearly doubled to $19.6 billion from $10.1 billion a year earlier due to a sharp slowdown in merchandise and services exports even as imports grew at a rapid pace, the central bank said Friday.

The current account is made up of trade balance and other items such as software payments.

The Reserve Bank of India said that the country's balance of payments "experienced a significant stress as trade deficit widened and capital inflows fell far short of financing requirement, resulting in significant drawdown of foreign exchange reserves."

The trade deficit in the October-December period widened to $47.7 billion from $31.4 billion a year earlier.

India's capital and financial account during the October-December period was at a net surplus of $8.2 billion.

The central bank had to draw down its foreign exchange reserves by $12.8 billion during the quarter compared with an addition of $4 billion a year earlier to balance India's external account.

Source: www.online.wsj.com

March 29, 2012

I want to expose centre on petrol prices: Parrikar:

Goan Chief Minister Manohar Parrikar caught the attention of Indians across the country by reducing taxation on petrol in the state and feels that his model for keeping petrol prices low can be replicated across the country.

“I want to expose the Central Government on the petrol prices. It’s an artificial hike created by the Central Government. The Centre is simply looting the people,’” Parrikar , an IIT engineer-turned-politician told Firstpost in a telephonic interview.

The Chief Minister has said he will take action against illegal mining in the state. PTI
Parrikar, who has virtually abolished state taxes levied on petrol, said, “Just examine the international market of petrol for the past two years. There is a fluctuation in prices, but on average the petrol price has remained around $100 a barrel at any point of time. This means that the petrol price should be around Rs 40 or 45 a litre.’’

Parrikar alleges that the Central Government is the culprit.

“It is charging additional Rs 16-17 a litre of petrol in the name of excise and custom duty,” he said.

Parrikar feels that massive cut in petrol prices will curb the inflationary pressure on tourism sector in his state.

“I have factored additional revenue in the budget and thus I am meeting my revenue target despite slashing the petrol prices. In Goa, 72 percent of the office goers and businessmen use two-wheelers. All of them will benefit. Prices of essential commodities will also come down. And I expect reasonable boost in tourism sector with slashing of the petrol prices,’’ Parrikar said.

Petrol in Goa, once the tax cuts are implemented, will be cheaper than all the metropolitan cities of the country.

And not just petrol, Parrikar also cut taxes on Aviation Turbine Fuel from 20 per cent to 12 per cent. A move that is expected to directly directly benefit tourists who fly to Goa.

Parrikar’s move to slash fuel prices in the state had caught the eye of Finance Minister Pranab Mukherjee as well who said it was a model other states could replicate but it could mean they would demand financial support from the Centre.

After getting done with delivering the state’s budget, Parrikar said is set to cleanse the Mining department of the Goa government. His campaign against illegal mining is responsible to an extent to bring him and his party BJP back into power in the recently held Assembly elections.

“Mining is not an issue, but illegal mining is an issue. I did not want to open all my fronts. Now when the budget exercise is over, I will take up the process of cleansing the Mining department of Goa,” he said

Asked if he will opt for auctioning the mining rights to the company, he said this is what the Central Government has to decide.

“I will go for the auction, if tomorrow the Central Government decides and directs me to do so,’’ he said.

In Goa, all the mines were leased out to some prominent families by the Portuguese government in pre-independence era. The Goa government is still following the same Portuguese system.

Source:I want to expose centre on petrol prices: Parrikar


Source: www.firstpost.com


February infra output up 6.8% y-o-y:

The eight core industries expanded by 6.8% in February, against 6.4% in the same period last year, on healthy growth in coal, electricity and cement production.

The infrastructure industries had grown by just 0.5% in the previous month.

Electricity, coal and cement output grew by 8%, 17.8% and 10.8% in February respectively, according to the provisional data released today.
In the same month last year, electricity and cement production had grown by 7.2% and 6.5% respectively, coal output contracted by -5.8%.

Crude oil production grew by 0.4% in the month under review against 12.2% in the comparable period of last year. Petroleum refinery products output too grew by 6.2% against a growth of 3.2% in the same month last year.

However, natural gas output contracted by -7.6%. Fertiliser and steel production grew by 4.1% and 4.3% in February as against 4.8% and 18.5% respectively in the same period last year.

During April-February FY12, the growth of core industries slowed down to 4.4% from 5.8% in the same quarter last year.

Source: www.business-standard.com

Brics sign pacts to promote trade in local currencies:

Concerned over uncertain global environment, Brics nations on Thursday signed two agreements to facilitate trade in local currencies and decided to examine the possibility of setting up a Development Bank on the lines of the World Bank to promote funding activities.

The agreements signed at the Brics summit by officials of the five countries--Brazil, Russia, India, China and South Africa -- are aimed at enhancing trade among the members -countries in the coming years.

The Master Agreement on Extending Credit Facility in Local Currency and the Multilateral Letter of Credit Confirmation Facility Agreement are being perceived as a step towards replacing dollar as main unit of trade among them. “The agreements signed today by development banks of Brics countries will boost trade by offering credit in our local currency,” Prime Minister Manmohan Singh said in a media statement after the meeting of Brics leaders.

On the proposal of setting up a Brics Development Bank, he said, “We have directed our Finance Ministers to examine the proposal and report back by next summit.” The initiative to set up a Brics Development Bank on the lines of the World Bank would allow the member-countries to pool resources for infrastructure development and could also be used to lend during the difficult global environment.

Expressing concerns over the current global situation and excessive volatility in capital flows and commodity prices, Brics leaders in the joint declaration said: “The immediate is to restore market confidence and get global growth back on track. ”...it is critical for advanced economies to adopt responsible macro-economic and financial policies, avoid creating excessive global liquidity and undertake structural reforms to lift growth that create jobs,“ it added.

Source: www.livemint.com

242 infra projects running behind schedule: Govt:

As many as 242 infrastructure projects in the country are running behind schedule, Parliament was informed today.

"Out of the 561 projects (costing Rs 150 crore and above) which are on the monitor of this ministry, 242 projects are delayed as on January 1, 2012," the Minister of State (Independent Charge) for Statistics and Programme Implementation Srikant Kumar Jena said in a written reply to the Lok Sabha.

The delay is due to time taken in land acquisition, procurement, law and order problems, inadequate infrastructure, delay in mobilisation by contractors, general cost escalation due to delay, increase in prices of cement and steel and exchange rate variations, Jena said.

A monitoring system is in place for central sector projects costing Rs 150 crore or more in 16 infrastructure sectors, he added.

Assam, Maharashtra, Madhya Pradesh and Uttar Pradesh have maximum number of delayed projects at 31, 20, 15 and 16 respectively, the minister added.

Source:www.business-standard.com

Mar 28, 2012

Fortune names Narayana Murthy among greatest entrepreneurs:

Infosys co-founder N R Narayana Murthy is among the 12 ''greatest entrepreneurs of our time'' according to a Fortune magazine list that is topped by Apple's late chief Steve Jobs.

It includes Microsoft founder Bill Gates and Facebook CEO Mark Zuckerberg for turning "concepts into companies" and changing the "face of business".

The US publication said as the "visionary founder" of Infosys, Murthy has built "one of the largest companies in India, helping to transform that economy and put it on the world stage".

Murthy, 65, proved that "India could compete with the world by taking on the software development work that had long been the province of the West.

"As one of six co-founders of Infosys and the CEO for 21 years, Murthy helped spark the outsourcing revolution that has brought billions of dollars in wealth  into the Indian economy and transformed his country into the world's back office," it said.

Fortune cited his lesson that an organisation starting from scratch must coalesce around a team of people with an enduring value system.

"It is all about sacrifice today, fulfilment tomorrow," it quotes Murthy, who is ranked 10th, as saying. "It is all about sacrifice, hard work, lots of frustration, being away from your family, in the hope that someday you will get adequate returns from that."

The list is topped by Jobs, whom Fortune calls "our generation's quintessential entrepreneur. Visionary. Inspiring. Brilliant. Mercurial."

Fortune said the most astonishing fact about Jobs was his view that market research and focus groups only limited a person's ability to innovate.

Jobs used his own intuition, which was not merely a gut call, "radar-like" feel for emerging technologies and how they could be brought together to create "insanely great" products, Fortune said.

"It is a safe bet to assume that none of Apple's blockbuster products, from the Macintosh to the iPod and iTunes, from the iPhone to the iPad, would have come about if Jobs had relied heavily on consumer research," it added.

Fortune related an incident when a reporter had called Jobs on the day he launched the Macintosh, asking him what type of studies Apple had conducted to ensure there was a market for the computer.

"In a nearly offended tone, Jobs retorted, 'Did Alexander Graham Bell do any market research before he invented the telephone?'", according to the publication.

Coming next is Gates, who Fortune says is one of the very few extraordinary entrepreneurs who have had the opportunity to change the world twice in one lifetime.

"First, as the world's most influential geek, he helped usher in the personal computer revolution.
"Now he is tackling the stubbornly difficult challenges of global health and public education as the world's most generous philanthropist," Fortune added.

Fortune said the similarity between how Gates led Microsoft and the way he is leading the Bill & Melinda Gates Foundation as its co-chair is the focus on hiring very smart people and putting them to work in small teams to solve big issues.

"There is no way of getting around that," it quotes Gates as saying.

"In terms of IQ, you've got to be very elitist in picking the people who deserve to write software."

The list also includes founder, chairman and CEO of express delivery company FedEx Fred Smith, Amazon.com founder and CEO Jeff Bezos, Google co-founders Larry Page and Sergey Brin, Starbucks CEO Howard Schultz, Facebook founder Mark Zuckerberg and Walmart chief Sam Walton.

On Zuckerberg, Fortune said by the time he celebrates his 28th birthday this May, Facebook would have in all likelihood gone public and become the biggest IPO of all time.

"The long-anticipated IPO will create hundreds of millionaires, result in a valuation of an Internet company that will approach USD 100 billion, and make the geek who dropped out of Harvard University his generation's Bill Gates," it said

Source: www.deccanherald.com


Vijay Mallya may sell between 12-13% stake in UBL:

Liquor baron and chairman of UB Group Vijay Mallya could be looking to offload 12-13% of his stake in United Breweries (UBL). Sources say Mallya and Heineken are in final stages of negotiations.

Heineken may look to acquire controlling stake. The deal could be valued around Rs 1,700 crore, reports CNBC-TV18, quoting sources
Mallya and Heineken could be working on an agreement on UBL stake sale. An announcement is expected shortly.

Currently, Heineken holds 37.5% stake in UBL and Mallya holds 23% stake in personal capacity. United Spirits Ltd (USL) and UB Holdings together own 14.71% stake in UBL. The balance is with the public.

Mallya stake sale will allow Heineken stake to go beyond 50%. Mallya will garner between USD 400-500 million, Rs 2,500 crore for 12-13% stake. The transaction will give control premium of Rs 800 crore to Mallya.

Meanwhile, sources indicated that USL and UB Holdings are unlikely to sell their stake.

When contacted, UB Group and Heineken refused to comment, saying they do not talk publicly about rumour and speculation.

At 13:37 hrs, UBL was quoting at Rs 548.40, up Rs 11.15, or 2.08%.

Source: www.moneycontrol.com

Mar 27, 2012

Will examine and modify GAAR if required, says FM:

Amid fears that FIIs may be taxed for short-term capital gains in stock markets, the government today said it will examine and modify the General Anti Avoidance Rules (GAAR) if required.

"I will examine and modify GAAR as and when required. This is essential for anti-avoidance," Finance Minister Pranab Mukherjee said in Parliament today.

In his Budget for 2012-13, Mukherjee had said that the government wanted to introduce GAAR in order to "counter aggressive tax avoidance schemes, while ensuring that it is used only in appropriate cases, by enabling a review by a GAAR panel".

Securities and Exchange Board of India Chairman UK Sinha had said yesterday the government "is going to have a new look at tax avoidance, so they they are going to work in that way".

The fear of GAAR had spooked stock markets which tanked 2% yesterday on concerns that all short-term capital gains made by FII and P-Note investments would be taxed. The Sensex, however, recovered today rising over 200 points.

Meanwhile, Finance Ministry sources seeking to allay fears that Participatory Notes -- an instrument through which FIIs unregistered with Sebi invest in stock markets -- said that the I-T department will have to first prove the intention of avoidance before making GAAR applicable.

"GAAR is not created to target any class of financial instruments. The onus of proving tax avoidance lies mainly with the government and partially on the assessee," sources said.

"All benefits which a person is entitled in a DTAA [Double Taxation Avoidance Agreement] treaty can be overruled or denied if GAAR is invoked," sources said.

Provisions of GAAR will be applicable from April 1 and not with retrospective effect.

Source: www.business-standard.com

Sensex breathes 205 pts sigh on GAAR clarity; rupee spikes:

The BSE Sensex showed smart recovery on Tuesday after CNBC-TV18, citing unnamed finance ministry officials, reported the government would not target the participatory notes under its newly proposed General Anti-Avoidance Rule (GAAR).

Overall the day was quite choppy ahead of F&O expiry on Thursday. The 30-share BSE Sensex rose 204.58 points or 1.20%, to close at 17,257.36 after hitting an intraday high of 17,366.84 and low of 17,061.16.

Finance ministry sources say, only participatory notes which fail certain regulatory tests may be subject to taxation. There will not be a double taxation, the report said.

Aliff Fazelbhoy, partner - tax, M&A and employment, ALMT Legal, said that it was not the government's intention to tax P-notes but advised caution until it was spelt out.

Meanwhile, the NSE's 50-share Nifty rallied 58.90 points or 1.14% to 5,243.15, helped by the rising rupee, short covering post yesterday's sharp fall and the global cues.

Jason Hughes of IG Markets tells CNBC-TV18 that Indian equities look attractive around the 5200 level on the Nifty.

The Indian rupee appreciated by 58 paise to 50.69 a dollar today after falling in previous sessions, which suggests that foreign institutional investors may have stepped in to buy their favourite stocks. The 8.79% 2017 bond yield spiked further by 0.5% to 8.52 ahead of announcement of government's borrowing programme this week.

Cigarette major ITC rose 1.8% and FMCG company Hindustan Unilever shot up 3.5%.

Country's largest lenders State Bank of India and ICICI Bank were up 0.7-1% while rival HDFC Bank was up 1.5%. Housing finance company HDFC moved up 2.2%.

Shares of Sterlite Industries, Cipla and DLF topped the buying list, rising 3.5-4.5%.

Engineering and construction major Larsen & Toubro, telecom company Bharti Airtel and top commercial vehicle maker Tata Motors rallied 2-3%.

Index heavyweights Infosys and ONGC were up 1-1.8%. Tata Consultancy Services, India's No. 1 software services exporter rose 0.9%.

However, shares of Maruti Suzuki, country's largest car maker fell 2% after Maharashtra government imposed 4% tax on diesel cars and 2% on petrol cars. State-run BHEL was down 1%.

Declining shares outnumbered advancing by 841 to 593 on the National Stock Exchange. Total traded volume was more than Rs 2.42 lakh crore.
Global markets gained after comments over US economy by Fed chairman Ben Bernanke yesterday. Asian markets closed 0.8-2.4% higher barring Shanghai while European markets were moderately higher.


Source: www.moneycontrol.com

L&T Finance buys Fidelity's India fund business:

Reuters) - L&T Finance Holdings (LTFH.NS) has acquired Fidelity Worldwide Investment's India mutual fund business to boost growth in the country's growing but highly competitive asset management business.

The acquisition will provide L&T Finance, a unit of Indian engineering conglomerate Larsen & Toubro Ltd (LART.NS), more products and access to retail customers, the company said in a statement on Tuesday.

Shares in L&T Finance, which the market values at $1.6 billion, ended 4.2 percent higher at 50 rupees before the deal announcement, while the BSE Sensex rose 1.2 percent.

Fidelity Worldwide was looking to sell its India mutual fund business, a source with direct knowledge said on January 30, as growing competition, weaker markets and regulatory changes take a toll on the sector's profitability.

The sharp fall in the Indian equity markets last year and the recent regulatory changes such as the removal of the entry load, or a commission charged by a mutual fund distributor for selling a product, have added to the competitive pressure.

Fidelity Worldwide's India asset management arm, which was launched in 2004, managed assets worth about 88 billion rupees as of end-December, data from the Association of Mutual Funds in India showed.

As per the assets under management, it was the 15th largest company in India's 44-player asset management industry.

Assets managed by fund managers in India rose to 5.9 trillion rupees as of March 2011 from 2.3 trillion in March 2006, a study by research and consultancy company PricewaterhouseCoopers showed.

Lured by the long-term prospects of Asia's third-largest economy, overseas fund managers, such as U.S.-based T. Rowe Price Group Inc (TROW.O) and Fidelity, have been buying into Indian money managers or setting up operations on their own.

Nippon Life Insurance earlier last year paid $290 million for a 26 percent stake in the asset management unit of Indian financial services provider Reliance Capital Ltd (RLCP.NS).

Lazard was the financial advisor to L&T Finance for the acquisition.

Source: www.in.reuters.com

India in world's most eco confident list:

 Indians have emerged as the second most confident people about their economy across the world on easing inflationary pressure and increased foreign investments, says a report.
According to global research firm Ipsos, India's economic confidence jumped by 9 points to 74 per cent in the month of February compared to the previous month, becoming the second most economically confident country after Saudi Arabia which tops the chart with 90 per cent.

Sweden is the third most economically confident country, where 73 per cent are optimistic about their economy, followed by China (72 per cent), Germany (71 per cent), Australia (66 per cent) and Canada (65 per cent).

"The Indian economy has continuously recorded high growth rates and has become the second most preferred destination for foreign investments and business. India's economic growth is expected to remain robust in 2012 and 2013, despite likely headwind of double-dip recessions in Europe and the US," Ipsos India CEO Mick Gordon said.

More than half of Indian citizens (51 per cent) believe their local economy which impacts their personal finance is good and 56 per cent people expect that the economy in their local area will be stronger in next six months, Ipsos said.

Mick further noted that inflationary pressure eased as the wholesale price index fell, making daily consumption items relatively affordable and giving hopes that Reserve Bank of India will ease its monetary policy stance by reducing the policy rates in the coming months which will further fuel economic growth of the country.

The report, which examined citizens' assessment of the current state of their country's economy said the overall global average economic confidence remained unchanged at 38 per cent last month.

On the other hand only a handful of those in Hungary (3 per cent) rate their national economies as 'good', followed by Spain (4 per cent), Italy (6 per cent), France (7 per cent), Japan (9 per cent) and Great Britain (10 per cent).

Countries with the greatest improvements include India, China, Mexico, Saudi Arabia and Turkey, while, countries with the greatest declines are Argentina, Poland, Belgium, Indonesia and Australia.

The survey was conducted in February this year among 19,216 people in 24 countries like Argentina, Australia, Belgium, Brazil, Canada, China, France, Germany, Great Britain, Hungary, India, Indonesia, Italy, Japan, Mexico, Poland, Russia, Saudi Arabia, South Africa, South Korea, Spain, Sweden, Turkey and the USA.

Source: www.financialexpress.com

Mar 26, 2012

Nifty ends below 5200, Sensex loses 309 pts; Re @ 51.42/USD

The BSE Sensex could not see any resurrect on Monday even after falling in previous five consecutive weeks. Rising bond yields, falling rupee and GAAR issues remained tricky aspects leading to yet another weak closing.

The market ended at two-month low. The BSE benchmark fell 308.96 points or 1.78% to close at 17,052.78, with all 30 stocks closing in the red. The NSE benchmark closed down 93.95 points or 1.78% at 5,184.25, underperforming global peers. European markets were moderately higher.

The Indian rupee depreciated by 25 paise to 51.42 a dollar while 8.79% 2012 yield rose by 0.05 to 8.42 ahead of announcement of government's market borrowing calendar for first half of FY 2013 this week.

According to Ambareesh Baliga of Way2wealth, the market is surely worried due to some of promissory-notes selling and some sort of advance selling by local investors.

With new General Anti-Avoidance Rules (GAAR) coming into effect from April 1, which will make P-Note based transactions taxable,  the market saw widedpread selling by foreign institutional investors. Foreign institutional investors (FIIs), including Mauritius based FIIs, will need to revaluate all PNs/ offshore derivative instruments now.

Baliga further said, the market could break most important 200 day moving average at about 5170 and could look at levels of about 5000-5050.

All sectoral indices closed in the red; the BSE Realty hit quite badly, falling 3.6%. Power, Bank, Metal, Oil & Gas and Capital Goods indices were down 1.8-2.6%.

ICICI Bank, country's largest private sector lender plunged 4.3% while rivals State Bank of India and HDFC Bank fell 1-2%. Housing finance company HDFC slipped 1.5%.

Oil & gas producers and index heavyweights Reliance Industries and ONGC dropped 2% each. Engineering and construction major Larsen & Toubro was down 1.77% and state-run Bharat Heavy Electricals lost 3%.

Tata Consultancy Services and Infosys, India's top software service exporters were down 1.7% while telecom player Bharti Airtel tumbled 2.3%.

NTPC, country's largest power generation company and Tata Power, No. 1 private power producer plummeted over 3.5%.

Shares of Bajaj Auto, Sterlite, Cipla and DLF among other largecaps tanked 3.5-4%.

However, Kotak Mahindra Bank rose 1% post block deal. Warburg Pincus sold 2.65 crore shares at Rs 530 a share on BSE via block deal.

Jaiprakash Associates outperformed other infrastructure stocks, rising 3% after the company received two contracts worth Rs 913 crore.

In the second line shares, Indiabulls Real Estate and HDIL plunged 6-7% after cash strapped Maharashtra government proposed to hike stamp duty on leave-license to 0.1% on market value or 1% of the average annual rent or deposit paid, whichever is higher, for residential properties. For commercial properties, the duty proposed is 0.4% for lease agreements over 60 months. This is a whopping 160 times hike from the previous fixed amount of Rs 25,000 for residential and Rs 50,000 for commercial properties for 60 months.

EIH Associated Hotel shot up 6% amid heavy volume as the company will consider rights issue and merger of company's wholly owned unit, Maharaj with itself.

Manappuram Finance crashed 11% today, which had fallen 20% last week after the RBI tightened rules for gold financing companies

About two shares declined for every share gaining on the BSE. The BSE Midcap and Smallcap indices were down 1.4-1.6%.



Taxman's GAAR spooks mkt: Mauritius invsts under threat?

The tax department is all set to tighten the noose around foreign investors who have been investing through shell companies in tax havens. CNBC-TV18 learns that the I-T dept will ask FIIs and foreign investors to file tax residency certificates if they are situated in a country with which India has a DTAA.

Legal experts say all forms of investment from Mauritius will now come under the scanner. Tax lawyers add that the taxman may eventually start going beyond just the tax residence certificate.

Moreover, the confusion over general anti-avoidance rules (GAAR) spooked the markets. (Read here )
Mukesh Butani, chairman at BMR Advisors believes to some extent the SC verdict in Azadi Bachao Andolan case, which was rendered on the back of a government circular of 2000, gets diluted. He says now that applies to all forms of investment that comes from Mauritius, be it an FII or FDI route.

"If the participatory note is in relation to an underlined asset i.e. part of the investments into an Indian company and that would be taxed, then that's a far-fetched argument," he says.

Corporate tax lawyer HP Ranina says the fear is that the tax authorities will not go only by the Tax Residency Certificates issued by Mauritius and therefore they will go into what they call the "Commercial Substance".

"The company will be deemed to be resident in Mauritius only if it has commercial substance in that country.

And not if it has just set up office in a lawyer's outfit with no employees and no other business activity. So, in that case, they will not apply the treaty and therefore the exemption which currently they enjoy from capital gains will not be applicable," he told CNBC-TV18 in an interview.

Market experts warn that unless there is clarity on the exact details of the GAAR guidelines, the markets may see more pain.

"This has been made very clear by the government as a general principle that India will not allow the use of tax havens - where this is used as a tax saving route or tax evasion route. So definitely harassment by tax department cannot be ruled out. The clarification given just now by the government that tax residency will be sufficient for claiming the exemption, that should suffice," investment analyst SP Tulsian told the channel.
However, Ambareesh Baliga, COO of Way2Wealth Brokers feels, if it is very clear that it is only prospective, then this may not be too much of an issue.  "The fear of it being retrospective, then invest climate will get visited, and downtrend nervousness will continue for a while longer," he explained.


Q: There is a lack of clarity on exact modalities on the entire issue. Can you throw some light on what kind of implications it could have?

Butani: General Anti-Avoidance was on anticipated lines. GAAR is a replica of the last draft that the government had brought out in the 2010 amendment bill.

The only difference is that, it's being legislated from 1st April 2012 rather than 1st April 2013, which coincides with the provisions of the DTC.

The last draft that the government came out did not announce the guidance with respect to and the circumstances under which the General Anti-Avoidance law will be invoked.

Guidance will also have checks and balances which the accessing officer and the commissioner will have to keep in mind before invoking GAAR. The fact that they have fast-forwarded the GAAR to 1st April 2012 there has been no change.

Q: Investments or profits made through participatory notes will be subject to tax and even investments routed through companies in Mauritius probably will be taxed, is there any reason to believe that these kinds of investments will be subject to short-term and long-term capital gains tax in India?

Butani: There is some anxiety as far as Mauritius issue is concerned. The amendment that has been brought in this Budget, which is applicable from 1st April 2012, states that a Tax Residency Certificate is an essential document, but not a conclusive proof.

The Supreme Court verdict in Azadi Bachao Andolan case, which was rendered on the back of a government circular of 2000 to some extend, gets diluted.

Now, that applies to all forms of investment that comes from Mauritius, whether it's an FII or an FDI route. Tax authorities will have a right to investigate into and go beyond the tax residency certificate i.e. the merits of the Mauritian structure and question the bases. And if a need arises disallow the benefit. That is very independent of the general anti-avoidance. The larger sentiment in the market could be driven by a combination of the two questions that you raised.

Q: Is there an element of confusion in the participatory note route?

Butani: Now you are talking about an amendment, which is in relation to Vodafone verdict, which talks about the underlying asset that would be a very strict interpretation. What you are saying suggests that, if the participatory note is in relation to an underlying asset i.e. part of the investments into an Indian company and that that would be taxed then that's a far-fetched argument. I need to read the code and then come to the conclusion that indeed is the issue.

Q: Does the market fear that stock bought via P-notes could be subject to tax?

Butani: There are several issues when it comes to divestment in a stock exchange in India. There are clear guidelines that suggest that such income is not liable to tax or is liable to tax under the capital gains provision.

Many of the FIIs had been structured through Mauritius and there is a greater degree of reliance on the Mauritius treaty. Combination of retrospective amendments, strict source-based rules, amendments dating back to 1962, general anti-avoidance provision and the added restriction on Mauritius treaty all adds to an element of nervousness.

The government intends that if there is an investment made in India through the FII route, the government will use a strict source-based rules to tax a part of that income that's seems to be the underlying philosophy of the government.

Nobody can be denied of legitimate change. The manner and the direction of the tax policy is suggestive of the fact that in future the government wants to bring many of these under taxation in India and it's in the process, they want to carry amendments.

Source: www.moneycontrol.com

Mar 23, 2012

Bharti Airtel files petition against taxman at Delhi HC:

Yet another battle may be brewing between a telecom player and the taxman. Bharti Airtel has filed a petition against the tax department's claim of Rs 1,067 crore.


What is the Taxman's claim:

When anyone travels abroad there is a certain amount of fee that your service provider makes to its international partners to ensure that you have services on a roaming basis. So, the payments which Bharti Airtel has been making since 2007 to 2011 to its international partners have been taxed by the tax department. The demand notice that was given to Bharti Airtel in January pertains to these payments.

If one breaks up the claim of Rs 1067 crore, sources says that for 2007-2008 they had asked for Rs 202 crore, for 2008-2009 it was Rs 329 crore, for 2009-2010 it was Rs 303 crore and 2010-2011 it was around Rs 221 crore

Bharti Airtel's action:

Bharti Airtel is looking at fighting this and has filed a petition in the Delhi High Court. The petition outlines that they have adhered to all tax rules and the demand on tax for international roaming payment is not valid.

This is an industry wide case, if the taxman is filing a case and fighting against Bharti Airtel, some other players might also be taxed. Bharti Airtel would take this up and other telecom players might be looking at taking it up if there is any kind of tax claim case against them.

Source:www.moneycontrol.com



At $695 b, China’s external debt hits 27-year high in 2011:


China’s external debt totalled a whopping $695 billion last year, highest in 27 years, adding to concerns that it might undermine the country’s fiscal position at a time when its economy has slowed down due to declining exports.

The external debt rose by $146 billion, or nearly 27 per cent from 2010, data released by the State Administration of Foreign Exchange (SAFE) said.

The proportion of short-term external debt to the total also climbed to a record high of 72 per cent as of December 31, in contrast to 68 per cent in 2010 and 60 per cent in 2009, SAFE data said.

But the year-on-year increase in short-term debt moderated. As of 2011 end, outstanding short-term debt stood at $500.9 billion, up 33 per cent. The growth rate was nearly 12 percentage points lower than in 2010.

The jump in foreign debt shows that China, which lends more than it borrows, is borrowing more from overseas to hedge against the devaluation of its foreign exchange reserves, analysts said.

Meanwhile, enterprises on the Chinese mainland have resorted to borrowing from overseas due to financing difficulties at home, they added.

As the yuan has strengthened against other currencies, the value of China’s foreign exchange reserves has shrunk, Li Jian, a research fellow from the Chinese Academy of International Trade and Economic Cooperation from the Ministry of Commerce, said.

According to SAFE, the yuan has risen 13.69 per cent against the US dollar since the beginning of 2008.

The yuan appreciation also had an adverse impact on China’s foreign exchange reserves of $3.20 trillion, highest in the world. As a result, the value of the Chinese government’s dollar-denominated assets has fallen, Li argued.

Borrowing in dollars allow the Government to offset some of those losses because it would effectively have to pay less when the loans come due if the yuan continues to strengthen, Li told state run Global Times.

Also, the Chinese business enterprises have become more reliant on borrowing from abroad due to soaring costs of domestic financing, Zhang Yugui, dean of the College of International Finance and Trade at Shanghai International Studies University said.

Source: www.thehindubusinessline.com

Mar 22, 2012

CAG says no loss to government, disowns coal blocks report:

The Comptroller and Auditor General (CAG) has virtually disowned its report on the allocation of coal blocks and called media reports related to it misleading. The CAG told the Prime Minister's Office (PMO) that there was no loss to the exchequer in the allocations of 155 coal blocks across the country between 2004 and 2009.

According to the CAG the report on the coal blocks which appeared in the media on Thursday does not constitute their findings and the loss figure of Rs 10.7 lakh crore was misleading. The CAG told the PMO that the audit report on coal blocks was still under preparation.

The PMO issues a statement saying that the CAG had written a letter to Prime Minister Manmohan Singh and said that the report was still at a very preliminary stage
"With reference to the lead story published in the Times of India today titled 'Government lost Rs 10.7 lakh cr by not auctioning coal blocks: CAG', the Prime Minister has received a letter from the Comptroller and Auditor General of India at 1:30 pm today," the PMO press release said.

The press release added: "Among other things, the letter clarifies that: In the extant case the details being brought out were observations which are under discussion at a very preliminary stage and do not even constitute our pre-final draft and hence are exceedingly misleading. … Pursuant to clarification provided by the Ministry in exit conferences held on 9.02.2012 and 9.03.2012, we have changed our thinking …. In fact it is not even our case that the unintended benefit to the allocatee is an equivalent loss to the exchequer. The leak of the initial draft causes great embarrassment as the Audit Report is still under preparation. Such leakage causes very deep anguish."

According to a report in 'The Times of India', 155 coal blocks were given to commercial entities without auction between 2004 and 2009 leading to a loss of nearly Rs 10.7 lakh crore. The estimated loss is six times higher than the presumptive loss figure of Rs 1.76 lakh crore for the 2G spectrum allocation.

Coal block beneficiaries include almost 100 private companies as well as some public sector units in industries such as power, steel and cement.

According to the CAG report the estimated "windfall gain" of Rs 6.31 lakh crore (PSUs - Rs 3.37 lakh crore and private companies - Rs 2.94 lakh crore) is based on the prices prevailing during the year of allocation on constant cost and price basis and as on March 31, 2011.

The amount at current prices would now work out to Rs 10.67 lakh crore (PSUs - Rs 5.88 lakh crore and private parties - Rs 4.79 lakh crore), the CAG said in the draft report.

Source: www.ibnlive.in.com

Business Quiz 12

1. Where has Harvard Business School set up its classroom in Mumbai for Executive Education in India ?

Ans. Taj Land’s End, Mumbai

2. Why has Nestle India been hauled up for violating advt norms ?

Ans. The tins of Lactogen do not have warning reg Mother’s milk in Hindi and font size was small

3. Name the celebrity who endorses Fast track, Flying Machine jeans, Herbalife, Fair and Lovely for men, Sangam suitings etc.

Ans. Virat Kohli

4. Connect Ventura, Mantra, RAHI, Turbo

Ans. Regional airlines started in India recently

5.What is the increased limit of free baggage allowance as per the recent budget ?

Ans. Rs 35000 from Rs 25000 earlier

6. Who has launched a special Tendulkar edition of a drink to honour Tendulkar 100th century ?

 Ans. Coca Cola

7. Strayer University US has launched an 18 month Executive MBA delivered online in collaboration with a fmr CEO, now retired. Who ?

Ans. Jack Welch

8. After 244 years Encyclopedia Britannica has stopped recently. What reasons have been cited ?

Ans. Internet and Wikipedia

March 21st, 2012

Tech Mahindra-Mahindra Satyam merger approved; swap ratio of 2:17:

The boards of Tech Mahindra and Mahindra Satyam have approved their merger with a swap ratio of 2:17. This means two shares of Tech Mahindra will be given for every 17 shares of Mahindra Satyam.

All assets & liabilities of Mahindra Satyam will be transferred to Tech Mahindra at book. Also, 20.4 crore Satyam shares will be transferred to Tech Mahindra Trust. The appointed date of scheme will be April 1, 2011.

The merger makes Tech Mahindra the fifth largest IT company by market cap. British Telecom holds 23.2% stake in Tech Mah.

Deutsche on Tech Mahindra:

-‘Buy’ rating, with target price of Rs 1,000
-Merge to be EPS dilutive initially
-Estimate FY13E EPS to be lowered by 9% to Rs 79
-Expect valuation discount vs other large caps to narrow
-Merged entity to have 45% discount to HCL Tech

The Tech Mahindra management spoke at a press conference on the merger. Here are the key takeaways:

-British Telecom to own 12.8% in new company
-10.4% stake to be held as treasury stock
-New entity to have $2.4 bn in revenue
-New entity to have 350 active clients; 75,000 employers
-Mahindra group to own 26.3% in combined entity
-Merged co to get 42% revenue from us & 35% from Europe
-In a position to give a much better value proposition
-Combined entity will have 75,000 employees, 350 clients
-Combined entity will have revenues of $2.4 bn
-Shown improvement in performance over last 6 quarters
-To focus on telecom ERP mobility post merger
-Merger process to take 6-9 months
-Will take it to HC of AP & Maharashtra for approvals
-Achieved all targets set for ourselves
-Merged entity to get 18-19% revenue from BT Group
-35 mn Tech Mahindra shares will be cancelled out
-EBITDA for merged entity is 17%
-A Trust will hold 10% of the merged entity
-To get consultants for merged entity's branding
-Both organisations have levers to improve margins
-Yet to finalise mgmt structure for merged entity
-Expect zero redundancies in staff
-Branding of the new entity will be decided in due course
-Will need approvals from CCI, stock exchanges
-Last 12 months combined entity revenue at $2,432 mn
-Last 12 months combined entity EBITDA at $392 mn

Vineet Nayyar
-Board accepted recommendations of investment banks for merger
-To approach AP, Maharashtra HC for approval of merger
-Process of merger to take 6-9 months for completion
-To focus on telecom, mobility, engineering post merger
-To take decision on branding in-time
-Already working on new mgmt structure

CP Gurnani
-Satyam performance consistent in past six quarters
-Merged co can leverage into new edge technology


IIM placements 2012 talks big money yet again:

It is that time of the year again when large global companies come to India to pick the best of talents for the best of price! The Indian Institute of Management (IIMs) across the country warmed up to begin the placement sessions in March, and there were new happy endings echoed from each corner of the country.

The esteemed management school of the country has not only maintained its placement story, but also outperformed itself in some cases. For instance, IIM- Calcutta’s (IIM-C), interviews were slotted to be held over five days; however, in just four days flat each of the 356 students bagged a job. Moreover, the total count of offers made, stood at 423, which meant that some of the students managed to get hold of more than one offer!

The institute saw an impressive response from FMCG, telecom, media and pharmacy companies like P&G, HUL, ITC, Kraft Cadbury, Nestle and Johnson & Johnson, Bharti Airtel, Vodafone, Biocon, GSK Pharma, Novartis and Times Group. Moreover, technology major Lenovo recruited for the very first time from IIM-C.

On the other hand, IIM-Ahmedabad (IIM-A), got the deemed Boston Consulting Group to issue offers to 17 graduates, compared to 11 offers last year. The institute has also been able to attract renowned consulting companies such as McKinsey, Bain & Co, AT Kearney, Accenture and Oliver Wyman. The average salary being offered to the students is estimated to be around Rs 22 lakh to Rs 27 lakh.

The content story continued as IIM-Bangalore (IIM-B) concluded its placement process with 423 offers from 126 companies for 363 PGP students. IIM-B officials reportedly said that this was the biggest group recruited in the institute’s placement history. Of these 423 offers, 206 offers were made during the final placement, 124 during lateral placements and the remaining 93 were pre-placement offers (PPOs).

Consultancy sector was the major employer at IIM-B, employing upto 30% of the students. Finance and sales-marketing sectors followed close on heels and employed 22% and 21% of students respectively. The institute also saw as many as 36 first-timers including Zynga, Redbus, Development Bank of Singapore and Raymond.

Though the placement saga ended on a happy note for IIM-B, the institute has seen a steady drop in overseas offers this year due to the slowdown seen in the global economy. Last year, there were 74 overseas offers made, as compared to 43 offers this year. However, of the 74 overseas offers made in 2011 only 54 students had opted for them, but this year, 41 have accepted the overseas offer. Offers were made by firms based out of Hong Kong, Singapore, Dubai, London, Paris, New Jersey, Dallas, Seoul and Switzerland.

IIM-Lucknow (IIM-L) had 57 first-timer recruiters like Michael Page International, Target Retail and Ingersoll Rand. IIM-L, had a total of 446 offers being made by 216 companies for the 389 graduating students of 2012 batch.

At IIM-Kozhikode (IIM-K), first-time recruiters increased by an appalling 47%, which included Global Environment Consulting (GEC), String Infotech, Head Hunters and Arbitron. Around 135 companies participated in the placements this year and IIM-K witnessed a top international pay package of $150,000, which was offered by a Europe-based investment bank. The institute also attracted start-up companies like Sports Cradle, Global Environment Concern, Neudesic and Heckyl.

Following the success stories of its counterparts, on a rather disturbing note, IIM-Indore has chalked out a plan to partner with some placement firms to get all the 450 students in its current batch recruited. The institute is reportedly in talks with around five agencies.

Govt pays Rs 2,500 cr to Vodafone after SC rejects review petition in tax case:

The Supreme Court has rejected the government's review petition in the Rs 11,000 crore Vodafone tax case.

Earlier in January, the Supreme Court had ruled in favour of Vodafone - observing that the income-tax authorities have no jurisdiction to tax Vodafone's $2.2 billion purchase of a majority stake in the Indian mobile unit of Hong Kong-based Hutchison Whampoa.

News came in last evening that the IT Deparment has handed over Rs 2,500 crore to Vodafone and that too with interest of 4%.

Union Budget 2012 had proposed to tax such transactions retrospectively. So the government can still send fresh notice to Vodafone, but it will have to wait till the Budget is passed.

Reacting to the entire incident, law minister Salman Khurshid said that the dismissal of the review petition and the Finance Bill can't be linked and that the consequence will be different once the government amends the IT Act. “Finance Bill will have separate consequences for government, Vodafone. Consequences may be convergent with Supreme Court's verdict,” he said.

Source: http://www.yourmoneysite.com



Vodafone will have to pay tax if I-T Act is amended: Govt:

British telecom major Vodafone will have to pay over Rs 11,000 crore tax, once the amendment to change the Income Tax Act is approved by Parliament, a Finance Ministry official said today.

"They (Vodafone) will have to automatically pay the tax after approval of the amendments to the Finance Bill by Parliament. We don't need to send fresh tax demand notice to them," a Finance Ministry official said.

The government yesterday refunded Rs 2,500 crore along with 4% interest to Vodafone following dismissal of its review petition against January 20 order by the Supreme Court.

The government had raised a Rs 11,000 crore withholding tax demand on UK-based telecom firm for its $11 billion acquisition deal with Hutchison Essar in 2007.

With an aim to clarify the "intent" of the Income Tax 1961 on taxation of overseas deals involving domestic assets, Finance Minister Pranab Mukherjee in his 2012-13 Budget has proposed to amend the law with retrospective effect, to ensure that such deals are taxed.

"You can only tax on the basis of existing law. We have no right to tax them, current law will prevail so long law is not changed," Law Minister Salman Khurshid had said yesterday after a meeting of senior Cabinet Ministers following dismissal of review petition by the apex court.

According to the Finance Ministry official, "an important question is about equity in taxation. While ordinary tax payer pays its taxes honestly, those who have huge wealth do not pay taxes by taking recourse to tax avoidance through creation of multiple structures and routing their investments through low tax and no tax jurisdiction."

In the $11.2 billion deal in May 2007, Vodafone had acquired 67 percent stake in the Hutchison-Essar Ltd (HEL) from Hong Kong-based Hutchison Group through companies based in the Netherlands and Cayman Island.

Source: www.business-standard.com

March 20th, 2012

SC dismisses review petition in Vodafone tax case:


It is yet another setback for the government in the Vodafone tax case -- the Supreme Court today dismissed the review petition filed by the central government in the tax case. With this the apex court retained its earlier ruling of no tax liability in Hutch-Vodafone transaction.

The Supreme Court dismissed the tax department's plea seeking a review of the court's ruling in January that Vodafone Group was not liable to pay any tax on its acquisition of Indian mobile assets, a lawyer on the case said.

Vodafone won a five-year legal battle against the Indian tax authorities in January as the country's top court dismissed a USD 2.2 billion tax demand raised over the British mobile phone giant's acquisition of Indian mobile assets in 2007.

The tax office last month filed a petition seeking a review of that judgment.

Will Vodafone be slapped with a new tax?

That is quite possible because they have moved a retrospective amendment. Clearly they have put in a validation clause in the finance bill saying that this over rules any court judgment.

So, the fact that the review petition has been dismissed today leaves the government with only two options,
one is to file a curative petition and the second is for a fresh tax amount to be slapped.

Another thing to remember is, the inance bill is now the property of the house. So, if the Parliament decides to pass the finance bill, which has a retrospective amendment, which has the validation clause in it and which has also changed the law of limitation to 16 years of foreign assets, then if you look at all these three aspects its is to enable and facilitate the government to be able to file a fresh tax demand.

We have also spoken to Vodafone's lawyers on this and they have said that if that happens they will again take the matter to court. So even though the petition may have been dismissed today, its certainly going to go this way or the other.

Source: www.moneycontrol.com

FDI up by 92% in January to $2 billion:


India received $2 billion foreign direct investment in January, showing an annual growth of 92% and taking cumulative inflows to $26.19 billion for April-January period of the current fiscal.

In January 2011, the country received foreign direct investment (FDI) worth $1.04 billion.

Experts feel if reforms are pushed, there is much more potential for attracting increased foreign investment.

"There is an urgent need for strong reforms like 100% FDI in sectors like multi-brand retail and insurance. There is a need to boost investor confidence. $2 billion in month is not a big number," Ficci Secretary General Rajiv Kumar said.

The sectors which received large foreign FDI inflows during the 10-month period this fiscal are: services ($4.83 billion), pharmaceuticals ($3.20 billion), telecommunication ($1.99 billion), construction ($2.23 billion), power ($1.56 billion) and metallurgical industries ($1.65 billion).

Mauritius remain the top source of inflows ($8.91 billion), thanks to the double taxation avoidance treaty.

Other sources were Singapore ($4.30 billion), Japan ($2.75 billion), UK ($2.75 billion), Germany ($1.46 billion), Netherlands ($1.16 billion) and Cyprus ($1.31 billion).

FDI inflows into India totalled $19.42 billion in 2010-11 financial year, down from $25.83 billion in 2009-10.

Recently, the government has liberalised the FDI regime and allowed overseas investment in bee-keeping and share-pledging for raising external debt.

Besides, the conditions for FDI in construction of old-age homes and educational institutions have been eased.

These will not be subject to the minimum and built-up area, capitalisation and lock-in period norms as applicable for the construction activities.



Source: www.dnaindia.com

March 19th, 2012

Feb retail inflation rises to 8.83% but veggies get cheaper:

Retail inflation was at 8.83 percent in February on account of higher prices of protein based items and edible oil products.

Retail inflation, based on the Consumer Price Index, was 7.65 per cent the January, as per the government data release here on Monday.

Among other items, only vegetable prices saw a decline of 4.73 percent over the February 2011 level.

During the month, the prices of egg, meat and fish rose by 10.62 per cent, while milk and its products turned costlier by 15.76 percent, year—on—year.

While ‘cereals and products’ reported a moderate price rise of 2.40 percent in February, pulses and products saw a rise of 4.17 percent.

Inflation in the ‘oil and fat’ category shot up 12.76 percent and condiment spices became costly by 8.68 percent.

Price of fuel and light, and clothing, bedding and footwear segments were in double—digits.

The inflation rates for rural and urban areas were 8.36 percent and 9.45 percent in February.

According to the revised data, retail inflation in rural and urban areas was – 7.28 percent and 8.25 percent in January.

Source: www.firstpost.com


Poverty dips to 29.8% in 2009-10: Planning Commission:


 The Planning Commission today said poverty in India declined 7.3 percent points to 29.8 percent of the population over five years to 2009-10.

Poverty in rural areas declined at a faster pace than in urban cities between 2004-05 and 2009-10, according to the Planning Commission estimates released on Monday.

Poverty in rural areas declined at a faster pace than in urban cities between 2004-05 and 2009-10. Reuters
The total number of poor in the country has been estimated at 34.47 crore in 2009-10, as against 40.72 crore in 2004-05.

“The all India head count (HCR) ratio has declined by 7.3% points from 37.2% in 2004-05 to 29.8% in 2009-10, with rural poverty declining by 8% points from 41.8% to 33.8% and urban poverty declining by 4.8% point form 25.7% to 20.9%,” said an official statement.

The sharp decline in poverty of over 10% points was witnessed in Himachal Pradesh, Madhya Pradesh, Maharashtra, Odisha, Sikkim, Tamil Nadu, Karnataka and Uttarakhand.

The data revealed that the poverty has increased in North-eastern states of Assam, Meghalaya, Manipur, Mizoram and Nagaland, the statement said.

Some of the bigger states, such as Bihar, Chhattisgarh and Uttar Pradesh have shown only marginal decline in poverty ratio, particularly in rural areas.

Source: www.firstpost.com