Posts Tagged ‘Pranab Mukherjee’

Weekly Update 9th – 13th August

The last week saw good amount of buying in U.S and other markets as the companies reported better numbers than the expectations in the result season. However the concerns remain over the U.S. recovery as the consumer spending, pending home sales and factory orders were all weaker than projected in June indicating moderation in the second half of the calendar year.

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In China, banking regulator has asked the lenders to conduct a stress test including worst case scenarios of prices dropping 50 percent to 60 percent in cities where they have risen excessively. The test highlights the government concern over the health of property market even after the regulator has tightened the real estate lending to crack down on speculation since mid April.

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Huge foreign money inflow, strong auto sales and manufacturing data together with good monsoon especially in the fortnight ending 4th August 2010 kept the markets on upbeat note. Life Insurance Corporation said that it plans to invest `2 trillion stocks and bonds in the current fiscal year. So far the Insurance major has invested 390 billion in the first quarter including 100 billion in equities.

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Approximately 2080 companies that have announced numbers have shown a mixed picture. The combined net profit of all companies fell 9.2% to 57,560 crore on 20.7% rise in sales to 7,07,925 crore in Q1 June 2010 over Q1 June 2009.

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Stock specific movement in market is likely to continue as some of the major companies like Bharti Airtel, State Bank, Reliance Communication, Suzlon, etc. are coming out with the results in the coming week.

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Pranab Mukherjee has already expressed concerns over the aggressive interest increase as it may moderate the economic growth. The Index of Industrial Production that saw some moderation in growth in May and also revised downward for the month of April is further expected to show some moderation in the month of June. Six core industries having weight of 26.68 percent in IIP have experienced a 3.4 percent expansion in June compared to 6.3 percent in the prior month. The data scheduled to be released on 12th August is likely to influence the markets and may help in gauging the central bank move in the coming months.

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Overall trend of world markets is up. Volatility indicators near lows are a sign of concern as it reflects that investors are not worried at all in taking positions. But till the trend of stock market is up, one should be playing on the long side only. US dollar index fall in last 3 months has also contributed to the rise of various asset classes. Nifty has support between 5350-5300 levels and Sensex between 17800-17600 levels.

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It appears that bulls are dominating bears in commodities. Market is looking very enthusiastic on the back of better results together with buoyant equity market. It is evident by the increased volume of commodity bourses across the globe. Noteworthy decline in dollar index has also supported buying in commodities.

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However, 80 is very good support for dollar index. The week is full of event risk. Traders may refrain to take large position in bullions before FOMC rate decision meeting. CPI and advance retail sales data of US will provide further direction to the base metals. Ongoing hurricane season is likely to keep crude oil in upper range. Severe drought and the decision to halt the export from 15th August to 31st December have stimulated fresh buying in grains and they are continuously moving up. Oil seeds and edible oil complex is looking promising and investors should utilized every dip as buying opportunity.

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Govt. Pegged Economic Growth At 7.75 Percent

Govt. Pegged Economic Growth At 7.75 Percent

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The government today pegged economic growth for the current fiscal at 7.75 per cent, higher than all previous estimates, but said high food inflation remained a cause for concern.

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Moreover, Pranab Mukherjee also said that the government could unload surplus wheat and rice stocks for open market sale.

“There are enough wheat and rice stocks. Therefore, it is proposed to make open market sale for unloading of surplus stock,” he said.

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The food inflation after surging to 19.83 per cent in the third week of December softened to 18.22% as of the week ended December 26.

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The wholesale price based inflation was 19.835 in the previous week while potato remained costly increasing as much as 110% over the last year.

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This was followed by pulses whose prices jumped by 42.21% while vegetables turned expensive by 30.97% and onion prices rose by 40.07% on yearly basis.

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“A major area of concern is high food inflation; therefore collaborative efforts of the central and state governments are required to tackle this problem” Mukherjee said at the meeting.

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Economic growth stood at 7 per cent during the first half of the current fiscal, Mukherjee said.

He pegged GDP growth for the whole fiscal at around 7.75 per cent – a number that exceeds the initial estimates of the government as well as the RBI.

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Prime Minister Manmohan Singh last month stated that returning to a speedy expansion pace after a slow 2008 due to the global economic crisis; economy is expected to rise by 7% or a little more in the current fiscal.

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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.

Government Will Take Necessary Steps to Control Inflation

Finance Minister, Mr. Pranab Mukherjee, said on Tuesday that rising inflation is a major area of concern and the government will take necessary steps to control prices.

Mr. Mukherjee said Inflation has risen mainly due to the prices of food that have gone up in last month. According to the provisional data issued on Monday by the Ministry of Commerce and Industry, the reported inflation rate accelerated to 4.78% in November to 1.34% in October.

Pranab Mukherjee also said the government is taking necessary steps to cut its recorded fiscal deficit to 3 % of GDP after 2001/12, from 6.8 % estimated for the current financial year ending March 2010.

During 2005-06 and 2007-08, the economic growth was recorded at 9 % is mainly coming down due to Inflation and high financial loss, which is creating obstacles in the way of economic development.

Mukherjee told in parliament, “Prices are a major area of concern and we shall have to address it.” He also added “Whatever steps are needed, we will take those steps,”

The government agencies are paying high prices to farmers for buying grains and supply shortage of food items in the country, resulted in increase of inflation in the last four decades.

According to the latest government data released shows food inflation at 16.7 % in November, which have pushed the inflation to 4.78 %.

Taking the steps to control inflation, the Reserve Bank of India (BBI) has cut its policy lending rate by 425 basis points between October 2008 and April 2009, reduced Cash Reserve Ratio (CRR) and brought in liquidity in financial markets to control the increasing Inflation rate.

The government also increased the tax slabs and higher spending, which widened the fiscal deficit that has to be funded by a record borrowing of 4.51 trillion rupees ($96.6 billion) in 2009-10.

Mr. Mukherjee also said the deficit was “unsustainable”, and the government would reduce it to 5.5 % in financial year 2010-11 and to 4 % in 2011-12″ and thereafter, we shall have to come back to 3%.”

The government”s fiscal deficit has touched almost half of the full-year estimate in the first six months of FY”10. The fiscal deficit for the six-month period stood at Rs 1,97,775 crore, which is 49.3 per cent of the total estimate of Rs 4,00,996 crore for this fiscal. The fiscal deficit during the same period last year was at 77 per cent of the annual estimate.

It swelled to 6.2 per cent of the Gross Domestic Product (GDP) last fiscal against budget estimates of 2.5 per cent.

Price rise a concern but downward trend noticed: Pranab

Union Finance Minister Pranab Mukherjee admitted that price rise has been a cause of concern for the Government but a downward trend has been noticed during the past fortnight.

However, he did not deny that certain essential commodities are having high prices but fortunately for the last one-and-a-half weeks they have been noticing a downward trend, though it will take some more time.

Meanwhile, noting that prices of cereals, fruits and vegetables have been on the higher side, he said if the shortage in supply was not made up through import or other measures, then the prices would go up.

For example pulses, the rate has been increased substantially while our total requirement is 18 million tonne, the total production is 14 MT, a huge shortfall of 4 MT.

On the other hand, he said that unfortunately, shortfall in sugar has happened at a time when the international production has also gone down while prices too remain high.

Wheat Sowing Picks Up Pace Across India

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the country.

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Wheat sowing picks up pace across India

Wheat sowing picks up pace across India:


As per the latest government estimate, wheat has been sown in around 13.70 million hectares of land till last week, almost 5% more than the same period last year.

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Sowing in India ‘s two main wheat growing province of Punjab and Haryana,which contribute almost 80% of the total country’s production is nearing end.

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Officials believe that  barring delayed harvest kharif crops, cooler temperature in most parts of northern, central and western India added with the recent unseasonal rains should provide an ideal climatic condition for good wheat sowing and early growth.

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The government expects an additional two million tonne of wheat production during the rabi season to offset some of the losses incurred during the kharif harvest.

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However, as per studies done by Indian Council of Agriculture Research, wheat yield can come down by almost 50 kilograms per hectare per day if it is sown very late (beyond December) in northern states.

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The output drop in southern wheat growing states and in Maharashtra and Karnataka is estimated to be around 36 kilograms per hectare per day if the crop is sown very late.

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In Other major Commodities Updates we can read about India’s FM statement on Inflation root cause and launching of in 12 commodities by MCX.


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Inflation due to food items shortage: FM


The current trend in inflation in India is a result of a shortage of food items and not due to a demand-push factor, Union finance minister Pranab Mukherjee told Parliament on Tuesday.

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The food articles index rose an annual 15.6% as at 14 November, up from the previous week’s 14.6% rise.

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The weakest monsoon since 1972 and then floods in parts of the country have hurt farm output and pushed up food prices.

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The finance minister said the government is keeping a close watch on futures trading in commodities.

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The Centre is planning massive investment to boost farm output, the minister said.

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MCX launches EFP in 12 commodities:


The Multi-Commodity Exchange of India (MCX) has introduced the exchange of futures for physicals (EFP) transactions in 12 commodities from Tuesday, the bourse said in a release.

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This process will help traders who have already entered into an agreement for physical trade to take position on futures platform for transparent pricing mechanism.

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In EPF, if the quality of the commodity traded does not match MCX specifications, both parties can then decide on a premium or discount to the settlement price on the futures platform on the delivery date.

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Indian Govt to Negatiote with Swiss Banks over Secret Black Money Info !

black money

A day after Swiss banks said it will not allow India to ‘fish’ for details about illegal money stashed in their banks, Government Monday night said it was not interested in getting information on all secret accounts held by Indians but will pursue specific cases.

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Union Finance Minster Pranab Mukherjee on Monday said the Indian Government will look into the matter of Swiss banks rejection to hand over details of the Indian clients.

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“They (Swiss Bankers Association) have not refused (to divulge information). They have suggested they are not for fishing and we are also not interested in fishing their whole list (of bank accounts),” Mukherjee told reporters.

He also added, “We will also work on specific information and we will also like to follow the Organisation for Economic Cooperation and Development pattern.”

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Earlier India’s hope to acquire information on Indian black money stashed away in Swiss banks dealt a severe blow, with the latter refusing on Sunday to reveal any details, saying that “Swiss law and tax model convention don’t permit name-fishing expedition” by a third country.

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The blow to India came barely a week after Swiss banking giant UBS AG turned over details of 4,450 secret accounts to the United States, under an agreement agreed upon by the two.

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On the Other side, Government has come under attack from the opposition for not “properly” making efforts to unearth black money parked in Switzerland.

The BJP wanted the government to mount diplomatic pressure on Switzerland to get the details.

“When the US government can get the list of persons (who have illegally stashed money in Swiss banks), why can’t the Indian government…It is the responsibility of the government. How can there be double standards,” CPI(M) Politburo member Brinda Karat said.

JD(U) attacked UPA government accusing it of not “properly” pursuing the matter with Swiss authorites and “not actually wanting to do it”.

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The Congress defended the government saying it was doing all it can under its jurisdiction to get the black money out as it was an issue of public interest and concerned the common man.

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“They (Swiss Bankers Association) have not refused (to divulge information). They have suggested they are not for fishing and we are also not interested in fishing their whole list (of bank accounts),” Mukherjee told reporters.

Mukherjee said, “We will also work on specific information and we will also like to follow the Organisation for Economic Cooperation and Development pattern.”

Earlier India’s hope to acquire information on Indian black money stashed away in Swiss banks dealt a severe blow, with the latter refusing on Sunday to reveal any details, saying that “Swiss law and tax model convention don’t permit name-fishing expedition” by a third country.

Finance Minister says Sowing will be 20 per cent lower :(

weak mansoon

Food production in the current fiscal is likely to go down as sowing will be 20 per cent lower due to the weak monsoon, Finance Minister Pranab Mukherjee said today.

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Also, 161 districts have been declared drought-prone, he added.

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However, indicating that this is unlikely to dampen the overall economic scenario, Mukherjee said he is in agreement with the Reserve Bank of India’s growth projection six per cent and above for the current fiscal.

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Also, he is confident that the direct tax collection target of Rs 3.7 lakh crore will be surpassed for the current fiscal, he added.

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Prime Minister Manmohan Singh yesterday met Commission for Agricultural Costs and Prices (CACP) Chairman Mahendra Dev, who apprised him about measures required to tackle the situation arising out of the deficient and delayed monsoon.

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Lack of PSU divestment roadmap stalls IPO market

Jagannadham Thunuguntla, equity head of SMC Capitals.

In the absence of a roadmap for divestment of public sector units (PSUs), many private companies that were getting ready to raise funds through initial public offerings (IPOs) may now decide to wait. The market fall on Monday (the budget day) and Wednesday has made matters only worse.

However, investment bankers see light at the end of the tunnel in the finance minister Pranab Mukherjee’s announcement on the need for mandating a minimum 25 per cent public holding in all listed companies.

“Excitement is a bit down as there is no roadmap for PSU divestment. This initiative would have created an ecosystem for several public issues of private sector companies hitting the market,” said Jagannadham Thunuguntla, equity head of SMC Capitals.

“The divestment programme is unlikely to be as effective as was expected to be before the budget,” Thunuguntla added.

However, there is an air of expectation that companies would revive their plans to float initial public offerings (IPO) once the market revives.

The falling market, post-budget, has also put a question mark on the companies that were planning to raise funds through qualified institutional placements (QIPs), is a corporate fund raising instrument that enables completion of the process within a month against four months taken for a typical IPO.

According to a report published by Enam Securities While eleven companies have raised Rs 12,000 crore through QIPs before the budget, about 20 companies are planning to raise Rs 36,500 crore through this route, post- budget.

This list is liberally sprinkled with real estate companies, which have been facing a severe funds crunch since the outbreak of the global financial crisis in September 2008.

KEY FEATURES OF BUDGET 2009-2010

UNION BUDGET 2009-2010

CHALLENGES

To lead economy to high GDP growth rate of 9 per cent per annum at the earliest

• To deepen and broaden the agenda for inclusive development to improve delivery mechanisms of the government.

OVERVIEW OF THE ECONOMY

• Growth rate of Gross Domestic Product dipped from an average of over 9 per cent in the previous three fiscal

years to 6.7 per cent during 2008-09.

• Whole sale price index rose to nearly 13 per cent in August, 2008 and had an equally sharp fall to zero per

cent in March, 2009.

• The structure of India’s economy changed over the last ten years with contribution of the services sector to

GDP at well over 50 per cent and share of merchandise trade doubling to 38.9 per cent of GDP in 2008-09.

• Recognising economic recovery and growth as co-operative effort of the Central and State Governments,meeting with Finance Ministers of States held as part of preparation of the Budget. This is intended to become an annual feature.

Highlights of Union Budget 2009-10

* Govt plans to bring back economy to high growth of 9%

* GDP growth dipped to 6.7% in FY’09

* FM to make pre-budget talks with state FMs annual affair

* Fiscal deficit up from 2.7% to 6.8% of GDP

* Return to fiscal prudence at the earliest

* ‘Aam admi’ is focus of all programmes and schemes

* IT exemption limit raised; Rs 15,000 for Sr.citizens

* Limit raised by Rs 10,000 for tax payers, including women

* 10% surcharge on personal income tax scrapped

* Fringe Benefit Tax abolished

* No change in corporate tax

* Defence gets Rs 1,41,703 cr, up 34%

* Total fiscal stimulus in 2008-09 amounts to Rs 1,86,000 cr

* IIFCL to evolve mechanism for increased funding of infra

* IIFCL to re-finance commercial bank loans up to 60 per cent in critical projects through PPP to tune of Rs 1,00,000 cr

* Allocations for highways being stepped up by 23 per cent

* Funds for housing, amenities for urban poor up Rs 3,973 cr

* Funds for JN Urban Renewal Mission up 87% to Rs 12,887 cr

* Assistance for storm-water drainage project up by Rs 300 cr

* Farm credit target up at Rs 3,25,000 cr from Rs 2,87,000 cr

* Interest rates incentive to farmers to repay loans on time

* Additional Rs 1,000 crore for accelerated irrigation scheme

* Export Credit Guarantee scheme extended till March 2010

* 2% interest subvention (IS) scheme extended till March 2010

* IS scheme to cover 7 job-oriented sectors, including textile, handicrafts and handlooms.

* Commodity Transaction Tax abolished

* New pension system trust exempted from STT; DDT

* Minimum Alternate Tax hiked to 15% from 10%

* Tax holiday on petro sector extended to natural gas.

* 100% tax deduction on political donation * Stimulus for print media for another six months

* Fertiliser subsidy to be nutrient-based, not price

* Expert Grp to form viable pricing for imported petro goods

* Banks and insurance firms to remain in public sector

* Rs 100 cr one-time grant to expand banks in unbanked areas

* Govt committed to provide Rs 100 a day as wages under NREGA

* Allocation of Rs 39,100 cr to be made for NREGA

* NREGA coverage increased to 4.74 crore households in FY’09

* Work National Food Security scheme has begun

* Allocation for Bharat Nirman being raised by 45 per cent

* Rs 2,000 cr rural housing fund under National Housing bank

* Mission for female literacy with focus on minorities, SC/ST

* 50% of all rural women to be brought into SHG programmes

* Full interest subsidy for students in select institutions

* Five lakh students to benefit

* Modernisation of national exployment exchanges

* Action for social security to unorganised sector workers

* New pension benefits for 12 lakh jawans and JCOs from July

* One lakh dwelling units for paramilitary forces personnel

* Unique Identification Card to citizens in 12-18 months

* Provision of Rs 120 crore for UIC project

* Rs 2,113 crore allocated for IITs and new IITs

* Rs 3472 cr for Commonwealth Games from Rs 2112 cr

* Customs, excise and service tax base rates unchanged

* For Indira Awas Yojana, allocation increased 63%

* IT returns to be made simpler

* 8 missions being launched under Plan on climate change

* Allocation for market development assistance scheme up 148%

* Allocation for Rural Health Mission raised by Rs 257 cr above interim budget

* Rs 500 cr for rehabilitation of Sri Lankan Tamils

* Rs 1,000 cr for infrastructure in cyclone-hit area in WB

* Total expenditure crosses Rs 10 lakh cr for first time

* Share of direct taxes in revenue increased to 56% in FY’09

However, the failure of Finance Minister Pranab Mukherjee’s Budget in slashing securities transaction tax, the status quo when it came to short-term capital gains tax, no substantial increase in exemption level for calculating personal income tax and no complete tax exemption on interest income earned by senior citizens was a huge letdown.

I would rate this Budget at 5 on a scale of 1 to 10.