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