Pre Budget Eco Survey Heralds Doom`s Day Ahead as US Economy Turns Bankrupt
Economic Survey has warned of the US slowdown having an effect on the Indian economy and maintained that sustaining growth of nine per cent will be a challenge along with keeping a lid on inflation
Palash Biswas
Contact: Palash C Biswas, C/O Mrs Arati Roy, Gosto Kanan, Sodepur, Kolkata- 700110, India. Phone: 91-033-25659551
Email: palashbiswaskl@gmail.com
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West Bengal Left front Goverment executed Maraichjhanpi Massacre to protect Environment violating International and inland water laws. Just see:
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I have been writing on American Budget session of Indian Parliament. It may sound somehow very harsh against images and statics projected by Shining Sensex India led by ruling Gloabl Hindu, Zionist, White manusmriti Apartheid Hegemony with all kinds of sposored Misinformation Explosion. Mind you, the Marxist MPs from West Bengal walked out during Railway Budget speech of Lalu Prasad Yadav accusing intense discrimination, regional imbalance and impending Privatisation. But their Kerala Comrades enjoyed it most. Not only this, but the Rebel in WB Ministery, Subhash Chakrabarti who uncharacterstically stood by Buddha in his Geastapo campaignfor Nandigram Genocide and drive capitalist Development, welcomed the railway Budget unprecedented in last six decades. Mind you, CPIM Party Polit Buroeu, Left Front chairman and CITU president also welcomed the budget cotrary to the stance of party MPs from Bengal who met the Prime Minister today demanding remedy. Subhash Chakrabarti, in fact, demanded that this Railway Budget could not be created by even with a hundred of Economists. Now, don`t you see any Game here? Railway property, Railway land, railway services would be given away to MNCs! It is unprecedented and Politicians pragmatic have to enjoy it! Moreover, Marxist capitalist party of India is planning to bid adiew to its agitational Past full of demonstration, strikes, Gherao, Bandhs > CPIM has the topmost priority on it`s agenda to convince grassroot level masses the logic of Capitalist Development.
The outrroted politician from Bihar , wellknown worldwide for his populist gimmics played his cards with surgical precision. May the World bank Slave, an Ex Communist P. Chidambarm lag behind? Indian Economy is tagged with US Economy which remains the economy of genocides, wars, civil wars, nuclear- bio-chemical disaster-global warming and Weapon Industry.
Now, it is official as the Economic Survey justifies the slower growth rate against the much hyped one quoting US Economy. Officially, the Ruling Hegemony, thus, accepts to be a tag for US Economy and US interests worldwide as well as all over the Galaxy. It is full circle post Modern Galaxy Manusmriti Apartheid Order of Phoenix!
We all hope that the modern intelligentsia may not ignore history despite it is declared dead along with ideologies! Media doesn`t care. But we know what happened to European economies during World war first and Second! We know the basics of German, Japanese and British fall from power and the economic followup. Latin america learnt to resist with the experience of Argentina. Even in eighties , Indian Economy was tagged with USSR. Indo USSR defence tie was the keystone of Strategig Alliance in third world countries and we had fantastic relations with Palestine, Gulf Countries, Africa and latin america ignoring China as well as South East Asia. Though, Indian Ruling Hegemony had relations with US ruling classes in that so much so hyped soviet model development days. We reversed the Eco Political system with the drop of USSR curtain immediately. We adopted US leadership sacrificing freedom and sovereignity and allowed chemical and biological war experiments right into our heart. Vietnam Friends turned to be the friends of George Bush and Henry Kissinger. Israel became our freind and we lost our friends in Gulf, latin America and africa. Yes, china has opened its economy as well. But China never compromised with its freedom, sovereignity and foreign policy at any stage as we did with any instance.
We have experienced USSR disintegration and have seen the result in economies of soviet Block nations. While the US citizens are unsure with its Economy burdened with worldwide War and Zionist lead, we chose to tag ourselves with US departing from socilaist and welfare state concepts. It suited the ruling class much. As Indian prime ministers did try every ploy to block SC, ST, OBC and Minority majority polarisation since the day when Dr Ambedkar resigned Nehru Cabinet. Operation Blue Star, interference in Srilanka, Ramjanmo Bhoomi Movement, Babri demolition , Gujrat Holocaust were the real instances of subvertions and resurgence of Hindutva as Patriotism. Neo Liberalism provided the Ruling Hegemony the best opportunity to make Indian constitution and Democratic set up irrelevant. Privatisation and FDI with corportising languages, identities, culture, sports, politics, economy and production system created the much needed syastem to eject out majority population from Life and Livelihood.
Agro sector has been devastated. Stock tickers became the indicators of growth and development. Consumerism heralded Blue Revolution with IT, TV, Mobile and auto industry making public services, food and employmet, health and education irrelevant. Production system is destroyed to accomodate MNCs, builders, mafia and corrupt politicians. Natural resource for livelihhod in India has always been Land. This land is looted for indiscriminate industrialistion, urbanisation, infrastructure building, shopping malls, Housing complexes and luxury resorts for ruling class, retail chain, nuclear plant, SEZ, Pcpir, MIR etc. Man has lost citizenship. he is deprived of human and civil rights. Nature is raped and natural resources massacred. Indigenous people are tyargeted as in Nandigram, Singur, Kaling Nagar, Dinhata, Noida, Gujrat, Polavaram, Narmada, Godavari and Tehri valleys, Navi Mumbai, Gurgaon and barnala and so on. Economic survey has not to project all these images understandably. The previleged reservation created creamy representative of SC, ST, OBC and minorities have allied with the Ruling Hegemony as Mayawati with Brahmins in UP. Latest newsbreak is that the Marxists in West Bengal has constituted a coordination committe of sixty four SC ST orgs to emphasis the defence of Resrvation and demand reservation in Private sector! Have the Marxists included Ambedkar in the line of Marx, Lenin, stalin and Mao?
The pre-Budget Economic Survey has warned of the US slowdown having an effect on the Indian economy and maintained that sustaining growth of nine per cent will be a challenge along with keeping a lid on inflation. Minister, P Chidambaram presented the Economic Survey 2007-08 before the Parliament today. While asserting that inflation can be contained, Mr Chidambaram also emphasized that an average GDP growth of 9% is achievable in the 11th Plan. The FM said the country’s growth has been reflected in the pace at which the average income is growing. The Economic Survey, however, reveals that capital inflows have been putting pressure on prices. On investment opportunities, the Survey assures that a climate conducive for investment will be maintained. The FM said there is no need to ensure non-inflationary growth.
Keeping India's economic growth at about 9 percent a year will be a challenge due to inflation and infrastructure constraints, and lifting it higher will be even harder, a finance ministry report said on Thursday.But inflation was likely to remain moderate in coming months and capital inflows, which have pushed the rupee up and complicated monetary policy, should ease in 2008, the economic survey for fiscal year 2007/08 said.
The annual economic report card of the government, Economic Survey 2007-08 tabled in Parliament by Finance Minister P Chidambaram said raising growth to double digit will require additional reforms and prescribed a variety of measures.
These included partial sale of identified profit-making non-navratana PSUs, phasing out control on sugar, fertiliser and drugs sectors, sale of oilfields to private sector, allowing a share for foreign equity in retail trade and further opening up of banking and insurance sectors.
Noting that economy is projected to grow at 8.7 per cent in 2007-08, the Survey said it represents a deceleration from the unexpectedly high growth of 9.4 per cent and 9.6 per cent in the previous two years. " Maintaining growth rate at nine per cent will be a challenge and raising it to two digits will be an even greater one," it said.
Linking the huge accumulation of capital inflows to the building pressure on prices, the Survey said that inflationary impulses from global commodity prices have to be tackled through use of fiscal and trade policy instruments. Inflation this fiscal is expected to return to 4.4 per cent,down from 5.4 per cent in 2006-07.
However, after presenting the Survey , Chidambaram exuded confidence of nine per cent average growth saying fundamentals were inspiring confidence and investment climate was full of optimism. " Optimism but with caution is the watchword " for the outlook for next year, he said adding India needed to respond to the evoling global situation without allowing the growth story to be affected.
Deceleration in growth in the current year is spread across most of the sectors except electricity, community services and services like trade, hotels, transport and communication.
The deceleration of growth of agriculture sector is attributed to the slackening growth of the Rabi crops. Manufacturing and construction, which grew at 12 per cent in 2006-07 dropped by 2.5 percentage points in the current fiscal. " The slower growth of consumer durables was the most important factor in the slowdown of manufacturing," the Survey said.
In the external sector, it noted that the US economy is expected to slow down in 2008, consequent to the sub-prime crises. Most projections of the world economy suggests a moderate but not severe slowdown in world growth.
" This will impact all countries including India, depending on the importance of the slowdown in different countries and importance of the country in our exports," the Survey said adding further fall in exports to the US may be unavoidable but relatively modest.
The Survey expected that one of the implications of the sub-prime crises will be increased capital inflows into India and other emerging markets.
" Thus the situation of excess inflows is likely to remain, though the pressure on reserve accumulation and exchange rate appreciation is likely to ease.
" Any reduction in excess capital flows from the high levels in 2007 may affect the equity markets in the short-term, but will make the task of monetary management easier," it said.
Released a day before the annual budget, it said more reforms were needed to raise economic expansion above 8-9 percent but also warned that a shortage of skilled workers was pushing up wages and could erode India's price advantage.
"The new challenge is to maintain growth at these levels, not to speak of raising it further to double-digit levels," the report, prepared by the finance ministry, said.
The yield on the benchmark 10-year bond eased 1 basis point to 7.58 percent after the survey and the partially convertible rupee slipped to 39.815/825 per dollar from 39.795/805 beforehand.
Indian policymakers have repeatedly talked of stepping up growth to 10 percent a year to reduce mass poverty and Finance Minister Palaniappan Chidambaram said after the report was released he was confident of achieving an average 9 percent up to 2012 while still keeping a grip on inflation.
"I am optimistic about growth and containment of inflation in the coming year," he told reporters.
"It will be my priority to provide a conducive investment climate and manage the macro economy to facilitate non-inflationary growth."
Excerpts from Finance Minister, P Chidambaram's speech:
I have just placed the Economic Survey for 2007-08 on the table of the House, and I wish to make a brief statement. The economy has decisively moved to a higher growth trajectory during the five years to 2007-08. In terms of GDP, the growth rate has averaged 8.7% per annum during these five years. This indicates stability and sustainability.
The growth is reflected in a near doubling of the pace at which the average income of our people is growing. If the rate of growth of per capita GDP at market prices continues at a five-year average of 7.2% per year, average income would now double in a decade instead of a generation or more.
The acceleration and improvement in the condition of the common man is also reflected in a near doubling of the rate of growth of per capital private consumption to 5.1% per annum from 2.6% in the previous 11 years.
With better targeting of government services, and an increase in their quality, we can ensure that overall welfare of the common man in terms of both private consumption and supply of public goods continues to increase rapidly.
I am optimistic about growth and containment of inflation in the coming year, which will be my priority - to continue to provide a conducive investment climate and manage the macroeconomy to facilitate non-inflationary growth. We have to ensure that the benefits of this growth percolate to the most marginal and vulnerable segments of society.
If you wish me to sum up in one phrase the outlook for 2008-09, I would say, “Optimism, but with caution as the watchword.” There are a number of things going in favour of India. We need to capitalise on these opportunities, while at the same time, responding to the evolving situation in the global economy, in a manner that our growth story is not affected.
Additional inputs from CNBC-TV18's Vivian Fernandes:
Economic fundamentals
Economics maintains a cautious stance on economic growth – it says that even though macro economic fundamentals are sound and the investment climate is full of optimism, maintaining 9% growth will be a challenge and raising it to double digits will be tougher still. The Survey admits that with the economy modernizing, globalizing and after last year’s unexpectedly high growth of 9.4%, some degree of cyclical fluctuation was expected for deceleration of growth to 8.7% - this has not come as a surprise. This has been factored into the 11th Plan to achieve an overall growth of 9% growth during this Plan. The economy will have to grow by 10% to 11% in the closing years of the 11th plan.
The economic fundamentals continue to inspire confidence and the investment climate is full of optimism for further economic growth the survey says as translated into the government’s mantra that is more inclusive growth both in terms of job opportunities and poverty reduction. But while employment growth has risen to 2.6%, the labour force has grown faster, the unemployment rate has risen to 8.3% in the 5-years to 2005 from 7.3% in the previous 5-years. So the unemployment situation has deteriorated.
Policy on FDIs
Unlike in previous years, when policy options were scattered through the Economic Survey, the Survey revisits the controversy on FDI and retailing and wants some equity to be given to foreign investors in all retailing sectors and 100% FDI allowed in consumer durable, semi-durable and luxury brand chains. It makes a case for 51% FDI in special category insurance firms, providing health and weather covers for farmers while renewing the call for raising the limit to 49% in other areas. In banking, it wants 100% FDI in new private Rural Agricultural Banks, with freedoms to takeover other private sector banks as an incentive - it wants them to be allowed to freely expand in small towns.
All these are recommendations and it does not mean that all these recommendations will be carried out because the Finance Minister will have to negotiate the political midfield and the numbers are not stacked in his favour for example on retailing. Even though the Survey says that 100% FDI should be allowed in consumer durable and luxury brand chains, the Left parties may not allow him to do that.
Rupee/ Exports-Imports/ Fiscal Deficit
The Survey also endorses the demand of the labour intensive and rupee-hit sectors like garment exporter for an increase in the working week to 60 hours to an amendment of the Factory’s Act, so that they can meet seasonal demands. It says that controls on sugar, fertilizer and drugs should be fazed out and reiterates the call that made in the Economic Survey of 2005 to amend the Coal Mines Nationalization Act, to allow regulated private entry into coal mining, as coal mining is only allowed for captive users in cement and power.
The Survey says that the government will be able to meet both the revenue and fiscal deficit targets for this year. One would recall that the Prime Minister’s Economic Advisory Council has said earlier this year - “While the fiscal deficit targets could be met, the revenue deficit targets might be hard to achieve.” But the Survey says that is not the case both the deficit targets will be met. But next year it says, it will be difficult to bring revenue deficit to zero as mandated by the FRBM (Fiscal Responsibility and Budget Management) because strong tax revenues seen this year are conditional on the economy continue to grow strongly next year and because of the adverse global climate that might not be possible.
But on a fiscal deficit front it says, that the deficit target of 3% will be achieved, the target set for this year will be met because of record tax collections. There is a word of praise for the States, the survey say that the State has done much better than the Centre. All 26 States have enacted FRBM legislation and they will together turn in a revenue surplus of 0.3% this year. The survey says that there is a need to reduce the fiscal deficit to below 3% in the coming years to make RBI’s monetary policy more effective, lower interest rates, reduce the gap with other countries and ease pressure on the rupee.
On the rupee front the survey says that the rupee has appreciated by 9.8% since April last year and by 13% last calendar. It quotes an IMF study to suggest that the rupee might be close to its equilibrium level. It says that it is not possible to establish a link between overall exports and the real exchange rate in the short-term; in the medium to long-term the survey says that productivity growth is a key to sustaining exports or manufacture growth and services. It admits that labour intensive export sectors like textiles have been hit apart from the rising rupee. The survey blame labour laws, lack of scale economy, logistical delays and high cost of power for all these things.
Investments on infrastructure
Even though the Survey says that the fiscal deficit should be reduced below 3% in the coming years, the planning commission itself has said that we must relax the fiscal deficit target to accommodate more investment in infrastructure, so I don’t think the government will reduce fiscal deficit below 3%.
The point regarding revenue deficit, the economic survey says that the target for this year will be met but I think there is a bit of fudge here because the survey is completely silent on off-Budget subsidies given in the form of bonds to oil companies, fertilizer units and to the Food Corporation of India. It is says that the subsidies this year are expected to be increased this year by Rs 6,550 crore over the Budget estimate of Rs 51,247 crore and that this might arrest their decline as percentage of GDP. It glosses completely over off-Budget subsidies and infact there is not a single mention of off-Budget subsidies that the government has given.
On the ratio of inflation, the economic survey says that inflation in case of investment goods has declined from 5.3% or so and that is positive from investment point of view.
Tighter fiscal deficit targets
The economy survey says that this is necessary so that the interest rates can be brought down and the pressure on the rupee can be eased and the bank funds are not pre-empted by the government but I do not think that the government will actually go below 3%.
There is no need actually to go below 3% in fact it can use a fiscal deficit to invest in infrastructure. What is required is of course to contain the revenue deficit which is unproductive but to expand a government expenditure on infrastructure because it has multiple effects on the economy.
This is what the Survey recommends.
US seeks to allay impression of pressurising India in N-deal
New Delhi (PTI): The US on Thursday sought to allay the impression that it was pressurising India to wrap up the civil nuclear deal, saying it was only expressing its "opinion" as it cares about the agreement and the relationship with this country.
A day after US Defence Secretary Robert Gates said the "clock was ticking" on the deal, Under Secretary of Commerce Mario Mancuso said the agreement was in the interest of both the countries and hoped the Indian political process will resolve the deadlock on the issue.
"India is a sovereign country. The Indian political process will take care of itself," Mancuso told reporters here when asked about the impression here that US was pressurising New Delhi to conclude the deal fast.
He, however, suggested that Washington was articulating the urgency needed on the issue as he said, "the United States has an opinion... The US cares about the relationship, it cares about the civil nuclear deal."
Apparently referring to the opposition to the deal by the Left parties, he said the UPA government is "working through" the steps involved in operationalisation of the agreement.
Mancuso, who was here to discuss high-technology trade, said the nuclear agreement is in "US interest as well as in India's interest."
Insisting that the nuclear deal will have no impact on growing bilateral trade ties, he said it will open up many possibilities and "underscore the level of trust and depth of relationship."
US advises India to auction spectrum
Thursday, 28 February , 2008, 08:15
Last Updated: Thursday, 28 February , 2008, 09:51
New Delhi: The US has formally suggested to India that allocating spectrum through an auction method would be the best way to distribute a scare resource. “The US Government has recommended to the Indian Government that it should follow open auction method for allocation of 2G and 3G spectrum,” the US Embassy First Secretary (Economics), Eric Anthony Jones, said at the launch of the Voice over Internet Telephony services by American firm Cordia Corp.
The US stance is in line with the suggestion made by the Indian Finance Ministry and the Telecom Regulatory Authority of India. The Finance Ministry had also suggested that auction would enable the Government to realise the best value.
However, the Communications Ministry has so far resisted auction and has instead chosen to adopt a complicated first-come-first-served policy.
On Wednesday, the Department of Telecom issued licences to three new players in select areas only, despite the fact they had applied for a pan-India licence. While Videocon promoted Datacom was given licences for 19 circles, Swan received only for 2 circles while Idea got 1.
Others who had earlier got letters of intent, including Shyam Telelink, Unitech and BPL, could get their licences by the week-end.
However, since the Department of Telecom does not have enough spectrum to accommodate all the new players across the country, licences are being given only for a few areas with the condition that they are subject to the final order of the courts.
The High Court and the telecom tribunal are hearing various cases lodged by those companies who have been adversely hit by DoT’s first-come-first-served policy.
According to the Wireless Planning and Coordination wing, spectrum is adequately available only in 4 circles and in the rest of the country there is enough only for 2-3 new players.
Wall St drops on economic, profit jitters
Thu Feb 28, 2008 9:42pm IST
By Ellis Mnyandu
NEW YORK (Reuters) - U.S. stocks fell on Thursday as recession fears mounted and the profit outlook turned gloomier following data that showed sluggish economic growth and a jump in workers' claims for unemployment benefits.
Shares of financial services companies, including insurer American International Group Inc and No. 3 U.S. bank JPMorgan Chase & Co, led declines following signs pointing to further deterioration in the credit and mortgage markets.
Two brokerages cut their earnings estimates for JPMorgan, whose stock declined more than 2 percent.
Sprint Nextel Corp tumbled more than 8 percent after the No. 2 U.S. mobile phone company posted a $29.45 billion quarterly loss and scrapped its dividend.
The latest reports on gross domestic product and jobless claims revived uncertainty about companies' profit outlook, which rely on investment by businesses and consumer spending.
"The market is unlikely to move substantially higher than 1,400 on the S&P 500 until we get some clarity on first-quarter earnings reports," said Gail Dudack, Chief Investment Strategist, Dudack Research Group in New York.
The Dow Jones industrial average was down 79.21 points, or 0.62 percent, at 12,615.07. The Standard & Poor's 500 Index was down 7.06 points, or 0.51 percent, at 1,372.96. The Nasdaq Composite Index was down 9.63 points, or 0.41 percent, at 2,344.15.
Share of AIG, due to report earnings after the closing bell, declined to $50.84 on the New York Stock Exchange, while JPMorgan shares fell to $43.39. Shares of Bank of America Corp dropped 1.8 percent to $42.15. Continued...
Defence deal delay raises talk of India-Russia unease
Thu Feb 28, 2008 6:25pm IST
[-] Text [+] By Bappa Majumdar
NEW DELHI (Reuters) - India has agreed to pay Russia a higher price for a delayed aircraft carrier, but analysts said problems with the deal underlined growing unease between one of the world's biggest arms buyers and its most trusted supplier.
The delivery of aircraft carrier Admiral Gorshkov has been pushed back four years to 2012 and would cost India an additional $1.2 billion in refitting costs, Vijay Singh, India's defence secretary, told reporters late on Wednesday in New Delhi.
In 2004, India and Russia signed a $1.6 billion deal to bring the Admiral Gorshkov to India by 2008.
But the Russians have postponed delivery, citing technical problems and overhead costs, while pushing the price up to $2.7 billion.
Analysts said Russia was playing hard ball partly because it was uneasy about India's growing ties with the United States and its plans to buy more weapons from Washington.
"Clearly, the Russians do appear to be now sending a message to India," Manoj Joshi, strategic affairs editor of The Hindustan Times, wrote in his column.
"They are saying that they are not happy with Indian moves to get closer to the U.S."
India is emerging as one of the world's biggest arms buyers, and is planning one of its biggest ever arms deals, a $10 billion deal to buy 126 fighter jets.
Defence deal delay raises talk of India-Russia unease
Thu Feb 28, 2008 6:25pm IST
By Bappa Majumdar
NEW DELHI (Reuters) - India has agreed to pay Russia a higher price for a delayed aircraft carrier, but analysts said problems with the deal underlined growing unease between one of the world's biggest arms buyers and its most trusted supplier.
The delivery of aircraft carrier Admiral Gorshkov has been pushed back four years to 2012 and would cost India an additional $1.2 billion in refitting costs, Vijay Singh, India's defence secretary, told reporters late on Wednesday in New Delhi.
In 2004, India and Russia signed a $1.6 billion deal to bring the Admiral Gorshkov to India by 2008.
But the Russians have postponed delivery, citing technical problems and overhead costs, while pushing the price up to $2.7 billion.
Analysts said Russia was playing hard ball partly because it was uneasy about India's growing ties with the United States and its plans to buy more weapons from Washington.
"Clearly, the Russians do appear to be now sending a message to India," Manoj Joshi, strategic affairs editor of The Hindustan Times, wrote in his column.
"They are saying that they are not happy with Indian moves to get closer to the U.S."
India is emerging as one of the world's biggest arms buyers, and is planning one of its biggest ever arms deals, a $10 billion deal to buy 126 fighter jets.
India sees sharp fall in farm growth this fiscal year
Thu Feb 28, 2008 9:31pm IST
By Biman Mukherji and Mayank Bhardwaj
NEW DELHI (Reuters) - India's farm growth will slump to 2.6 percent this financial year, as lower investment and stagnating yields cut output in a sector which directly employs more than half workforce, the government said on Thursday.
Ministers have said that raising agricultural expansion to 4 percent is vital if the country is to maintain overall gross domestic product growth close to buzzing 9 percent levels.
But the finance ministry said in its annual survey of the economy for 2007/08 expansion was likely to fall far short of the previous year's 3.8 percent but be close to a long-term average of around 2.5 percent.
"Besides weather-based fluctuations, output of this sector has been affected due to reduced capital investment and plateauing of yield levels in major crops," the survey said.
On Friday, Finance Minister Palaniappan Chidambaram will unveil the ruling Congress party-led coalition's last full budget before general elections due by May 2009, and is expected to focus on ailing farms to bolster the economy and woo votes.
With irrigation systems watering just 40 percent of cultivated land, millions of poor farmers are dependent on erratic monsoon rains and in 2007 rainfall was classed as "deficient" over a quarter of the country.
The survey said boosting farm growth was vital for sustaining overall economic expansion and for price stability in the light of hardening international prices of food, fuels and edible oils.
A jump in global prices of farm commodities has made importing staples a costly and politically damaging exercise and contributed to a spike in local food prices.
"With area under cultivation remaining constant, improving the productivity of crops is necessary for strengthening the farm sector," the survey added.
India's food output has failed to keep pace with the demands of its 1.1 billion population, most of whom rely on the land for their livelihoods, widening an already yawning wealth gap between city and village.
"The rate of growth of foodgrains production decelerated to 1.2 percent during 1990-2007, lower than the annual rate of growth of population, averaging 1.9 percent," the survey said.
MISSING TARGETS
India was forced to import wheat for the first time in six years in 2006, and had to buy again last year.
The survey said a shortfall was expected in winter crop output and noted that total foodgrains production would fall 2.2 million tonnes short of a 221.5 million tonnes target in the year to end-March.
The total oilseeds output was expected at 27.2 million tonnes against a target of 30 million tonnes.
The survey said stocks of foodgrain on Jan. 1, 2008 stood at 19.2 million tonnes against a target of 20 million. It added that the rice stocks were at 11.5 million, wheat at 7.7 million.
It estimated the production of sugar, another staple food item, at around 27 million tonnes in the year to September while demand was pegged at 20 million tonnes.
The share of agriculture in the nation's gross domestic products has steadily declined from over 36 percent in the early 1980s to around 18 percent in 2006/07, the survey said.
Auto firms need to innovate to be globally competitive: Survey
New Delhi (PTI): The Indian auto industry, which has been going through a slump, faces the challenge of continuous innovation and upgradation to remain globally competitive, the Economic Survey said on Thursday.
The Survey said that in the April-November period, the sector recorded negative production growth chiefly because of a 10.6 per cent decline in output of motorcycles and 6 per cent of auto-rickshaws as compared with the corresponding period of the previous year.
However, the production of passenger cars grew by 15.6 per cent, and scooters and mopeds by 18.9 per cent, it added.
Noting that India was a net importer of auto components, the Survey said under the current liberalised duty regime, the challenge is to innovate and upgrade continuously to remain competitive in the international market.
During 2006-07, automobile export crossed USD 2.76 million, with 15 per cent of cars produced being shipped overseas. In the same period, almost 10 per cent of commercial vehicles, 26 per cent of three wheelers and 7 per cent of two-wheelers were exported, it added.
On the components front, the Survey said turnover of the sector grew from USD 3.1 billion to USD 15 billion between 1997-98 and 2006-07.
It also highlighted the government's steps to make India a preferred destination for design and manufacture of automobiles with the finalisation of Automotive Mission Plan 2006-16.
The National Automotive Testing and R&D Infrastructure Project was also set up at a cost of Rs 1,718 crore, it added.
In 2006-07, the government had announced reduction in duty of raw materials to 5-7.5 per cent from 10 per cent, it said.
Govt issues 22 more telecom licenses
NEW DELHI: The government on Thursday issued 22 more licenses to new players, including Idea Cellular and realty major Unitech, a move that would bring in competition and lower mobile tariffs.
Unitech Developers has been given licenses for 12 circles including in Andhra Pradesh, Gujarat, Haryana, Punjab, Rajasthan and Bihar.
Birlas-owned Idea Cellular got licenses for eight circles. This would make Idea a pan-India operator. Idea was given license in Punjab yesterday on a day when the government issued a total of 22 permits.
Datacom Solutions, in which Videocon has a majority stake, has been awarded licenses for two more circles in addition to 19 given yesterday, a senior official in the Department of Telecom (DoT) said.
On spectrum (radio frequency), officials said that no final decision has been taken as yet as to when the process of allocation would begin. The DoT is assessing the availability in each circle, besides continuing negotiations with the Defence ministry to get spectrum vacated at the earliest.
Meanwhile, on a petition filed by Idea and Spice communications, the telecom tribunal TDSAT today passed an interim order that the date of application of new players be considered for issuance of licenses and spectrum.
The officials said application date has no meaning as most players are being issued permits simultaneously, and in all probability, spectrum would also be alloted in a similar fashion. Spice Communications, which was given LoI last month for five circles, is likely to get licenses along with Unitech tomorrow for the remaining 10 circles.
As of now, licenses are being issued on the basis of first-come-first-served as per the payment of license fees.
Economy has moved decisively to higher growth phase
Maintaining 9% GDP growth ‘will be a challenge’, says Economic Survey
http://www.thehindubusinessline.com/2008/02/29/stories/2008022952360100.htm
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New Delhi, Feb. 28
Optimism on growth laced with caution on the inflation and external sector fronts. This, in essence, is the outlook conveyed in the Economic Survey tabled in Parliament ahead of the Finance Minister, Mr P. Chidambaram, presenting his Union Budget for 2008-09 on Friday.
“The economy has moved decisively to a higher growth phase,” the Finance Ministry’s annual report card on the Indian economy has declared.
With the country’s gross domestic product (at constant market prices) growing at eight per cent plus for an unprecedented five years in a row — 8.4 per cent in 2003-04, 8.3 per cent in 2004-05, 9.2 per cent in 2005-06, 9.7 per cent in 2006-07 and a projected 8.7 per cent this fiscal — the average per capita income of its people has risen by 7.2 per cent per annum during this period.
This is against 3.1 per cent over the 12 years from 1980-81 to 1991-02 and 3.7 per cent during the subsequent 11 years to 2002-03.
The sharp acceleration witnessed since would mean that “average income would now double in a decade, well within one generation, instead of after a generation (two decades).”
The Survey has noted that if growth is maintained at the targeted nine per cent for the Eleventh Five-Year Plan period (2007-08 to 2011-12) and stepped up to 9.5 per cent in the succeeding year, it would make India in a select league of medium/large countries that have averaged a GDP growth or more for a decade.
These include the likes of Japan, China, Taiwan, Hong Kong, South Korea, Singapore, Portugal and Greece. But achieving this, it admits, “will be a challenge,” requiring additional economic policy reform measures.
‘Reform options’
Among the “reform options” that the Survey has prescribed are permitting “regulated private entry” into coal mining and “free entry” in the case of private and public-private partnership rail freight companies; selling old oil fields and coal mines to the private sector to effect enhanced recoveries; raising the foreign equity cap in insurance from the existing 26 to 49 per cent; phasing out of controls on sugar, fertiliser and drug industries; amending the Factories Act enabling a 60-hour work week with a 12-hour daily limit to meet seasonal demand through overtime; and enacting a new bankruptcy law to facilitate exit of old/failed management “as expeditiously as possible”.
Further — in what would obviously not please the Left — the Survey has recommended the listing of all unlisted public sector undertakings (Bharat Sanchar Nigam Ltd, Coal India, and so on) and auctioning all loss-making non-revivable units, including allowing negative bidding in the form of debt write-offs for those with zero net worth.
Allowing a “share” for foreign equity in all retail trade and 100 per cent in respect of luxury brands and other specialised retail chains is another proposal that could encounter political opposition.
Fiscal concerns
The Survey has, however, not made any strong case for doing away with subsidies on food, fertilisers or oil.
Unlike in the past — when fiscal concerns prompted detailed observations on subsidies — the latest Survey has made a passing mention of the issue of bonds to oil companies, fertiliser units and the Food Corporation of India, without going into their deeper financial implication.
Meeting the fiscal deficit target of three per cent of GDP by 2008-09 (as per the Fiscal Responsibility and Budget Management Act) “may not be very difficult,” it has claimed.
The Survey has, instead, chosen to focus on more pressing concerns pertaining to inflation and slowdown in exports and consumer goods production. While the overall inflation is projected to decline from 5.6 per cent in 2006-06 to 4.1 per cent this year, “the behaviour of agricultural prices, including essential consumption items, will be critical,” it has warned. Also, “the ability to meet shortfalls at affordable prices is being eroded by global shortages and rising prices”.
Export outlook
According to the Survey, the outlook for exports in 2008-09 “may not be as bright as in the past few years”, the main reason being the slowdown in the US. This could lead to a further widening of the trade deficit. “As such, goods and services balance might also worsen to the extent that the rise in acquisition costs of petroleum are not matched by an increase in non-factor service exports…(There could also be) increased risk aversion on the part of developed country investors,” it has warned.
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Business Line
Major issues the Budget shouldn’t ignore
R. C. Murthy
Wednesday, 27 February , 2008, 11:30
Last Updated: Wednesday, 27 February , 2008, 11:53
Apparently contradictory signals have emerged over the past three weeks from policymakers on the future course of the Indian economy. Will the growth slip or surge?
After the third quarter review end-January, the Reserve Bank of India reaffirmed continued high priority to combating inflationary pressures, and dashed industry captains’ hopes for an interest rate cut. By projecting a flat 8.5 per cent growth next fiscal, the RBI Governor, Dr Y.V. Reddy, projected slim chances of a rebound. Hitting again the recent peak of 9.6 per
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