Economy Round Up – July 07 to 11, 2014

India Infoline News Service | Mumbai |

Gross tax revenue projection was cut by ~Rs15,000 crore compared to interim Budget numbers - Indirect tax revenue projected to grow by 20.3% yoy and direct tax by 15.7%

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Union Budget 2014-15: Good to begin with…

The most anticipated event after a record election victory is now behind us. Arun Jaitley’s Budget speech evoked confused response with wild swings during and after the Budget presentation. There was a feeling among certain sections of the market that bolder reforms were warranted given the strength of this government’s mandate. Akin to the Railway Budget, the details were missed although the broad picture was conveyed reasonably well. Gross tax revenue projection was cut by ~Rs15,000 crore compared to interim Budget numbers - Indirect tax revenue projected to grow by 20.3% yoy and direct tax by 15.7%. While customs and service tax projections appear reasonable, excise duty growth projections at 15.4% appear steep. On the direct tax front, personal income tax projection has been substantially reduced (by Rs22,200 crore) compared to interim Budget, but still appear high. Perhaps, the government expects additional income from advance ruling settlement in case of individual tax-payer disputes. Otherwise, there is a risk of falling short of the tax revenue target set by Rs10,000 crore.

Along expected lines, spending on Plan expenditure was substantially increased to support growth. Plan expenditure growth is targeted at 21% to be spent towards agriculture, capacity creation in health and education, rural roads, national highways, rail network expansion, among others. Surprisingly, non-Plan expenditure was not projected to grow at a slower rate than set during the interim Budget. Nevertheless, non-Plan growth is much lower than what is being spent on the Plan side. Subsidies have been pegged at 2% of GDP and only marginally higher than the interim Budget – petroleum subsidy seems to be under control with continued diesel deregulation and assuming gradual increase in LPG and Kerosene prices. Food subsidy target is reasonable but fertilizer subsidy looks under-provided, which could result in a working capital crunch for the sector. On MGNREGA, the minister aims to put this money to more productive use...Read More

Highlights of Union Budget 2014-2015

There are green shoots of recovery being seen in global economy. Two years of sub-5% growth has resulted in challenging situation for country. Steps announced in budget to take Indian economy to 7-8% growth in coming years. FM to lay down Broad policy indicators in budget:

The Current Economic Situation and the Challenges

  • Decisive vote for change represents the desire of the people to grow, free themselves from the curse of poverty and use the opportunity provided by the society. Country in no mood to suffer unemployment, inadequate basic amenities, lack of infrastructure and apathetic governance.
  • Challenging situation due to Sub 5% growth and double digit inflation.
  • Continued slow-down in many emerging economies a threat to sustained global recovery.
  • Recovery seen with the growth rate of world economy projected at 3.6% in 2014 vis-à-vis in 2013.
  • First budget of this NDA government to lay down a broad policy indicator of the direction in which we wish to take this country.
  • Steps announced are only the beginning of the journey towards a sustained growth of 7-8% or above within the next 3-4 years along with macro-economic stabilization.
  • Growing aspirations of people will be reflected in the development strategy of the Government led by the Prime minister Narendra Modi and its mandate of "Sab ka Saath Sab ka Vikas".
  • Need to revive growth in manufacturing and infrastructure sectors.
  • Tax to GDP ratio must be improved and Non-tax revenues increased...Read More

All about the Union Budget 2014-15

Govt to initiate Pradhan Mantri Krishi Sinchayee Yojana scheme: FM

Budget 2014-15: A dedicated TV channel ‘KISAN TV’ to be launched for farmers

Rs.200 Crores allocated for the Statue Of Unity: FM

Budget 2014-15: Govt will establish two agriculture research institutions of excellence

Welfare of girl child on upmost priority of the government: FM

Enactment of Indian Financial Code necessary for better governance and accountability: FM

Enactment of Indian Financial Code Necessary for better Governance and Accountability: FM

Energy Sector given due Importance in Budget 2014-15: FM

Higher Budgetary allocations have been made for rural road and water sectors: FM

E-Visa to be Introduced at Nine Airports: FM

Defence Allocation Raised to Rs 2,29,000 crore: FM

Govt reiterates its commitment to the welfare of SCs & STs

Rs. 1000 Crore for Development of Rail Connectivity in the North Eastern Region: FM

RBI to create a Framework for Licensing Small Banks: FM

Budget 2014-15: New scheme to support 600 new and existing Community Radio Stations

Budget 2014-15: Five new IITs and five new IIMs will be set up in the states

General Budget 2014-15: Housing For All by 2022

Budget 2014-15: 100 Crore allocated for metro projects in Lucknow and Ahmedabad

Pending Insurance Laws (Amendment) Bill to be tabled in Parliament Soon: FM

Govt to constitute Expenditure Management Commission: FM

Click here to "Read the all About Budget"

Budget 2014-2015: The Finance Minister’s complete speech

The people of India have decisively voted for a change. The verdict represents the exasperation of the people with the status-quo. India unhesitatingly desires to grow. Those living below the poverty line are anxious to free themselves from the curse of poverty. Those who have got an opportunity to emerge from the difficult challenges have become aspirational. They now want to be a part of the neo middle class. Their next generation has the hunger to use the opportunity that society provides for them. Slow decision making has resulted in a loss of opportunity. Two years of sub five% growth in the Indian economy has resulted in a challenging situation. We look forward to lower levels of inflation as compared to the days of double digit rates of food inflation in the last two years. The country is in no mood to suffer unemployment, inadequate basic amenities, lack of infrastructure and apathetic governance. The slowdown in India broadly reflects the trend in many economies. In contrast to the aftermath of the crisis of 2008-09 when restoration of growth in advanced economies was the primary concern, the continuing slowdown being presently witnessed in many emerging economies has posed a threat to a sustained global recovery. Fortunately, there are green shoots of recovery being seen in the global economy. As per IMF, the world economy is projected to grow at 3.6% in 2014 vis-à-vis 3.0% in 2013, with the Euro area expected to register a positive growth after the contraction witnessed in 2012 and 2013. However, the performance of the US economy with attendant implication for the unconventional monetary policy stance and global financial conditions is pivotal to the fate of global recovery in the coming years. These are the head winds against which the Indian economy would have to maneuver its way to attain high growth trajectory...Read More

INDUSTRY REACTIONS

Budget provides excellent directional mandates: Khaitan & Co

Does this budget have a vision?: Ravi Dawar

Overall feeling of this budget exercise is positive: Polaris Financial Technology

Govt plans to create AIIMS in every state is significant: Health Care at Home

Govt acknowledged need for investment in agro-technology: Insecticides India

We are very positive about fiscal prudence reflected in this budget: IET

Increase FDI limit in Insurance is a welcome reform: PolicyBazaar.com

Reduction in customs duty welcomed: Nadir Godrej

Budget introduced Fiscal Deficit and Inflation: Eon Electric

Good Budget presented by FM: NASSCOM

Budget for 2014-15 is growth-positive: ICRA

India Budget targets are credit positive; execution key: Fitch

No major announcement for Oil and Gas: Essar Oil

Budget has provided the right direction: Microsoft

Implementation of GST seems to be a priority: Kotak MF

Budget announces range of initiatives to boost growth: ICICI

Tax rebates will encourage property seekers to finalise their pending property decision: IndiaProperty.com

No Bold Reforms by the Modi Govt’s First Budget: GJEPC

Budget: Govt seems on right path, Muthoot Finance says

Positive for the real estate sector as well as for the Banking sector: AVJ Group

Budget 2014-15 broadly met expectations: Federal Bank

CII National Committee on Chemicals welcomes the budget

Click here to "Read the all Industry Reactions"

On the sidelines of Union Budget 2014-15

The Union Budget of 2014-15 cheered a large set of people. It managed to deliver a clear roadmap for the Indian economy in the years to come. Considering the paucity in time, given that the Modi Government just come to power, the finance minster still managed to address important issues of inflation, growth, infrastructure, housing, manufacturing, investments and also proposed on coming up with new initiatives for the real estate sector, insurance sector and the "aam admi", without going overboard.

Let us have a look at some of the finer points from the Union Budget:

Finance Minster, Arun Jaitley’s speech started at sharp 11:00 am, ended at 13:13 pm. This is one of the longest budget speeches in the recent past that lasted for almost 135 minutes. The minister sounded confident and optimistic throughout, barring a few fumbles here and there that were insignificant. After 45 minutes of delivering his speech, the minister was granted a five minute break from the speaker. Well, we thought there was half time only for the World Cup. In the second half, he continued his speech while being seated. Their motto was loud and clear--Sab ka Saath Sab ka Vikas. "We shall leave no stone unturned in creating a vibrant and strong India," said the FM...Read More

Highlights of Economic Survey 2013-14

The Economic Survey 2013-14, presented in the Lok Sabha by the Union Finance Minister Arun Jaitley, has noted that as India had a large trade deficit in the first quarter, negative market perceptions led to sharper outflows in the foreign institutional investors (FIIs) investment debt segment, leading to 13.0% depreciation of the rupee between May 2013 and August 2013. The government swiftly moved to correct the situation through restrictions on non-essential imports like gold, custom duty hike in gold and silver to a peak of 10%, and measures to augment capital flows through quasi-sovereign bonds and liberalization of external commercial borrowings. The RBI also put in place a special swap window for foreign currency non-resident deposit (banks) [(FCNR (B)] and banks’ overseas borrowings through which US$ 34 billion was mobilized. The one-off flows arrested the negative market sentiments on the rupee and, in tandem with improvements in the BoP position, led to a sharp correction in the exchange rate and a net accretion to reserves in 2013-14...Read More

Economic Survey: Indian economy is likely to grow in range of 5.4 to 5.9% in 2014-15

Eco Survey: Global climate community faces a deadline for reaching an agreement in 2015

Eco Survey: Sustaining Improvement in BoP Position – A Challenge

Eco Survey: Next wave of reforms will be through strengthening institutional foundation

Eco Survey: External Debt remains within manageable limits

Eco Survey: India’s foreign exchange reserves increased to US $ 304.2 bn at end march 2014

Economic Survey 2013-14: Annual Average Exchange rate goes UP

Eco Survey: India has second fastest growing services Sector with Compound annual growth Rate at 9%

Eco Survey asks govt to move towards Low and Stable Inflation regime

Economic Survey 2013-14: WPI Inflation shows Sign of receding fell to 5.98% during 2013-14

Economic Survey 2013-14: Biometric identification to improve Subsidy Schemes

Economic Survey: Low and Stable Inflation Regime sought

Railway Budget 2014-2015: Read the Complete Speech of Railway Minister

It gives me immense pleasure to present my maiden Railway Budget. Indian Railways, being the nation’s prime mover, is the structure and soul of Indian economy. It echoes rhyme and rhythm in the hearts of every citizen of this country – from Baramulla in the North to Kanyakumari in the South and from Okha in the West to Lekhapani in the East. Madam Speaker, we all know that Indian Railways cut across all barriers of regions, classes and creed and is a microcosm of India on the move. From a man on the streets of Bengaluru to fish vendors in Kolkata to the hustle bustle at Nizamuddin Station, everywhere you find a citizen of this country rushing to connect with Indian Railways...Read More

Railway Budget 2014-15:Railways need to Balance Commercial and Welfare Objectives

Railway Budget 2014-15:Bullet Trains and Diamond Quadrilateral Network of High Speed Rail

Railway Budget 2014-15:Water, Shelter and other Passenger Amenities to be Improved

Budget comes in the face of huge fund requirement, incomplete projects: Railway Minister

Railway Budget 2014-15:Railways to earn Rs. 1.64 lakh Crore in 2014-15

Railway Budget 2014-15:Digitization and GIS Mapping of land assets of Indian Railways to be done

Highlights of the Railway Budget 2014-15

  • Thrust
  • Safety
  • Project Delivery
  • Passenger Amenities/Services with focus on food services & on cleanliness, sanitation, toilets
  • Financial Discipline
  • Resource Mobilization
  • IT Initiatives
  • Transparency & System Improvements.
  • Major Challenges facing the Railway System
  • Vast tracts of hinterland waiting for rail connectivity.
  • Railways expected to earn like a commercial enterprise but serve like a welfare organization.
  • Railways carry Social Service Obligation of more than Rs. 20,000 cr by carrying services below cost. This is nearly 16.6% of GTR and is almost half of Railways’ Plan Outlay under budgetary sources.
  • Surplus revenues declining; Hardly any adequate resources for its development works.
  • Tariff policy adopted lacked rational approach; passenger fares kept lower than costs; loss per passenger kilometer increased from 10 Paise per Km in 2000-01 to 23 Paise in 2012-13.
  • ‘Decade of Golden Dilemma’ – choosing between commercial and social viability.
  • Share of Railways in freight traffic coming down consistently.
  • Rs 5 lakh crore required for ongoing projects alone.
  • Focus so far in sanctioning more and more projects with inadequate prioritization rather than completing them; Of the 674 projects worth Rs 1,57,883 cr sanctioned in the last 30 years, only 317 could be completed. Completing the balance requires Rs 1,82,000 cr.
  • Most of Gross Traffic Receipts is spent on fuel, salary and pension, track
  • & coach maintenance and on safety works . In the year 2013-14, Gross Traffic Receipts were Rs. 1,39,558 crore and total Working Expenses were Rs. 1,30,321 crore,
  • The surplus, after paying obligatory dividend and lease charges, was Rs. 11,754 crore in 2007-08 and is estimated to be Rs. 602 crore in the current financial year...Read More

Railway Budget 2014-15: 58 new trains; 11 existing trains to be extended

Railway Budget 2014-15: Railways committed to meet social service obligations despite rising costs

Railway Budget 2014-15: Budget allocation for cleanliness in trains and stations

Railway Budget 2014-15: Project management group to be set up to overcome delays

Rail Budget presents roadmap for modernization of railways: Srei Infra

Rail budget provides vision of new govt: Bombardier Transportation

Cargo growth at major ports continues to remain sluggish: ICRA

Railway Budget 2014-15:Railways committed to meet Social Service Obligations

May IIP growth at 4.7% vs 3.4% in April

The Index of Industrial Production (IIP) for the month of May stood at 4.7% as against 3.4% in April. The May IIP has come in higher than expectations and the momentum for economic recovery is building up. April IIP growth unchanged from provisional estimates of 3.4%. The IIP for the month of May 2014 stands at 173.8, which is 4.7% higher as compared to the level in the month of May 2013. The cumulative growth for the period April-May 2014-15 over the corresponding period of the previous year stands at 4.0%. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of May 2014 stand at 125.6, 181.6 and 183.2 respectively, with the corresponding growth rates of 2.7%, 4.8% and 6.3% as compared to May 2013 (Statement I). The cumulative growth in the three sectors during April-May 2014-15 over the corresponding period of 2013-14 has been 2.6%, 3.7% and 9.0% respectively.

In terms of industries, sixteen (16) out of the twenty two (22) industry groups (as per 2-digit NIC-2004) in the manufacturing sector have shown positive growth during the month of May 2014 as compared to the corresponding month of the previous year (Statement II). The industry group ‘Furniture; manufacturing n.e.c.’ has shown the highest positive growth of 60.0%, followed by 37.1% in ‘Tobacco products’ and 33.7% in ‘Electrical machinery & apparatus n.e.c.’. On the other hand, the industry group ‘Radio, TV and communication equipment & apparatus’ has shown the highest negative growth of (-) 40.3%, followed by (-) 28.6% in ‘Office, accounting & computing machinery’ and (-) 7.4% in ‘Motor vehicles, trailers & semi-trailers’. As per Use-based classification, the growth rates in May 2014 over May 2013 are 6.3% in Basic goods, 4.5% in Capital goods and 2.7% in Intermediate goods (Statement III). The Consumer durables and Consumer non-durables have recorded growth of 3.2% and 3.9% respectively, with the overall growth in Consumer goods being 3.7%...Read More 

News Infocus

One-straw revolution

Societal norms have their own autocratic ways of thrusting expectations on people. For instance high-flying executives, the implicit diktat goes, should move around in a Mercedes, BMW or Audi – all coveted brands matching the position. So several eyebrows were raised when Manguirish Pai Raiker as the President of Goa Chamber of Commerce and Industry was seen travelling in a humble Maruti 800. He was naturally quizzed about his unlikely preference. His answer of resounding conviction did more than silence his self-appointed examiners; it hinted at a one-straw revolution in the making. He replied, "Rather than buy a fancy automobile for individual posterity, I would invest my hard-earned money for the bright future of our State." And he did exactly what he proclaimed, by incepting the Ramanata Crisna Pai Raikar School of Agriculture at Savoi Verem, Ponda in Goa to promote agricultural education in the State of Goa. Raiker magnanimously donated his sprawling ancestral house for the cause which is where the school stands today. What was the motivation behind this monumental decision?...Read More

Drivers in China lose nine working days per year due to traffic

TomTom (TOM2), a global leader in traffic, released the first edition of its China Traffic Index, revealing that drivers are spending an average of nine working days a year stuck in traffic. "Rapid urbanisation has led to increased car sales across the country. Despite measures to reduce traffic congestion, such as limiting vehicle registration and building new roads, traffic continues to be a significant issue", said Ralf-Peter Schäfer, Head of Traffic at TomTom.

"By empowering drivers with accurate traffic information, so they know exactly which roads are congested and the length of the delay, they can get where they want to be faster."...Read More

Holidays are a great way of enhancing children’s overall knowledge

TripAdvisor, the world’s largest travel site*, shared findings from its ‘Trips with Children Survey 2014’. The survey was aimed at understanding the vacation planning preferences of families having childrenbetween the age group of 1 to 18 years.

Along with the findings, a list of Top 10 Attractions to visit with children,across 7 categories was also revealed.

The categories include: Cultural, Adventure, Museums, Landmarks, Outdoors, Amusement and Zoos...Read More

India’s tipping intent falls by 10% in 1 year: TripAdvisor

Nine myths about credit score and credit report

Inadequate understanding of words can result in myths. And when it comes to financial world, where thorough understanding of words makes a material difference, one cannot afford slight understanding. Take for instance, the distinguishing factor between credit score and report. Most believe these words can be used interchangeably. In truth, one (credit score) is a part of the whole (credit report). Like this, there are various myths associated with these two terms. As more and more banks insist on having an inspection of your credit profile, it is important that we debunk various myths associated with credit ‘score’ and ‘report.’... Read more

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