Posts Tagged ‘global crisis’

Fiscal deficit at $65.7 billon for Apr-Nov: Govt

The fiscal deficit of India for the period between April to November stood at Rs 3.06 trillion ($65.7 billion), or 76.4 percent of the full-year target, the government said in a statement on Thursday. The tax receipts stood at Rs 2.33 trillion and a total expenditure stood at Rs 6.22 trillion for the first eight months of the financial year 2009/10.

In July, the government had forecasted fiscal deficit of Rs 4 trillion, or 6.8 percent of gross domestic product (GDP), for 2009/10.

The finance minister Pranab Mukherjee earlier this month had said that the fiscal deficit would not cross the target of 6.8 per cent of the gross domestic product (GDP). With the prevailing trends in the receipts and expenditure, along with better than expected economy performance in the second quarter of the current fiscal, it is expected that the fiscal deficit will remain with the estimate of 6.8 per cent.

However, the direct tax collections by the government increased by a marginal 3.7% to Rs 1.83 lakh in the first 8 months of this fiscal. Further, in the personal income tax segment, the government collected Rs 70,262 crore, up 4.53% while in November, the tax collections were nearly similar to last year as the mop-up was Rs 10,375 crore.

Moreover, the corporate tax collections declined by about 30% to Rs 3,214 crore against Rs 4,561 crore last fiscal while in the April-November period, the collections by way of the Security Transaction Tax stood at Rs 4,349 crore, up 4.44%.

The Finance Minister, Mr. Pranab Mukherjee, yesterday stated that the Indian economy cannot sustain a high fiscal deficit for very long and it is, however, still too early to pull out of the fiscal stimulus.

“We shall have to strike a balance between the requirement of the economy and also the capacity of the economy to bear this level of fiscal deficit and borrowing,” the Finance Minister said on the sidelines of a Corporation Bank event.

Indian corporates use downturn to reduce costs

The global crisis changed the growth oriented goals of Indian businesses while there was a focus on operational effectiveness to ensure survival and companies undertook measures to achieve this as per a Price water house Coopers survey, Beyond the Downturn.
Indian corporates use downturn to reduce costs
However, India Inc. seems to have mitigated the impact of the meltdown on their businesses with over 91% respondents executing vital cost reduction and 70% reviewing operational/working capital cycle.

Moreover, India Inc. is bullish about its prospects and is beginning to assay growth again with the economy appearing to be on a path to recovery.

Meanwhile, it is said that survey respondents ranked cash flow management, difficulty in forecasting results and maintaining employee morale during the downturn as key constraining factors.

Further, majority of the survey respondents identified benefit from achieving increased operational effectiveness by following cost reduction, reduction in working capital and optimization of supply chain as a significant opportunity resulting from the downturn.

On the other hand, strong domestic economy, stable banking and financial system and timely government intervention were seen as key factors responsible for the less impact of the downturn on India.

Additionally, 99% of respondents viewed growing demand/volumes as their key recovery expectation with new hiring/ capacity addition getting the second priority.

India Crossed the $100 Billion Mark in FDI :)

Amidst of the global crisis, India crossed the $100 billion milestone in foreign direct investment (FDI)

Amidst of the global crisis, India crossed the $100 billion milestone in foreign direct investment (FDI)

Amidst of the global crisis, India crossed the $100 billion milestone in foreign direct investment (FDI) through equity confirming its rising profile as a safe and sound investment objective.

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However, 44% of the money came through Mauritius as investors wanted to take advantage of India’s double taxation avoidance treaty with the island nation.

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Moreover, the cumulative FDI inflows since 2000 and up to July 2009 amounted to $100.33 billion while the inflows in the first 4 months of the current fiscal were $10.49 billion and the other big investors included Singapore, the US, UK and the Netherlands.

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Additionally, it is said that FDI’s main impact comes from new technology, new managerial capabilities and new benchmarks in corporate functioning whereas India reached the $100 billion mark at a time when the global financial crisis has had a dampening impact on FDI flows which are expected to fall this year.

Further, it is said that the global FDI flows will decline by 30% in 2009 reviving only marginally during the next year.

Although declining, FDI flows to developing countries proved to be more flexible than other capital flows such as portfolio investment and bank lending, the main reasons being that FDI is more of a long term nature than capital flows.

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On the other hand, India’s services sector received 23% of the cumulative equity FDI inflows followed by computer software, hardware, telecommunication and real estate.

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Indian Export to Register 10% Growth during 2010-11 :)

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With all sectors including textile showing recovery, the total export from India is likely to register 10% increase during 2010-11.

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However, the growth during this fiscal (2009-10) would be either flat or marginally negative, although export observed a marginal decrease during the last financial year due to global recession.

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While, it is said that almost all the sectors in India were showing a stimulation or plus-growth, including automobile, plantation and engineering.

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On the other hand, it is said that the economic situation is not really that bad and there is a sign of revival during the last two to three months whereas the year 2010-11 is said to be good for all the sectors, particularly textile, which was feeling the ”cyclic pinch” and that would be back to business in the year.

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Though textile would continue to remain weak in 2009, there could be recovery in the year 2010 and once the demand from the USA and EU improves, it is expected to achieve a reasonable growth πŸ™‚

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However, though there was a steep export growth in textiles and clothing in the first half of 2008-09, there had been slowdown in demand from major markets, USA and EU, due to the global economic crisis.

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