After declining for three consecutive weeks, the Indian equity market was back as the NSE Nifty and the Sensex hit fresh life-time high during the week.
The government would take "bold decisions" and pursue path of fiscal prudence to revive economy, Arun Jaitley says
Finance Minister Arun Jaitley stressed that India has to make a choice between mindless populism and fiscal prudence.
Investors will keenly look at what the FM finally does as far as the budget is concerned.
Earlier this week,
Jaitley said the government would take "bold decisions" and pursue path of fiscal prudence to revive economy. If you indulge in mindless populism, you burden the exchequer, Jaitley said.
Speaking at an event organised by Institute of Chartered Accountants of India on Tuesday, Jaitley said that opportunity to grow comes with challenges.
According to Jaitley, India could not afford populism under the current circumstances with the economy growing less than 5% and in the grips of a high fiscal deficit and high inflation.
"That is a trap that will be difficult to get out of," he said.
Pointing out the challenges faced by India, he said fiscal deficit is high, inflation is beyond acceptable limits and the fallout of Iraq crisis looms large on the economy.
WPI Inflation rose to five-month high of 6.01% in May, while the fiscal deficit stood at 45% of the budget estimate in the months of April and May.
Jaitley said that it was an impediment to growth. "Fiscal deficit is a major challenge. The growth has slowed down," he said.
Modi's moment: The reforms India needs to tackle
India's Prime Minister Narendra Modi is certainly not short of advice about what to do about the economy. So here is a guide to the top 10 things needed to get India's economy going again. If fully implemented, these could raise growth to 9% or even double digits over the next five years, HSBC Global Research says in its report Macro India Economics. Enticing prospects. However, the hitch lies with the proviso "if fully implemented". There are more obstacles ahead than many seem to believe. True, the BJP-led NDA coalition has won a thumping victory. It now has complete control of the lower house of parliament.
However, it still lacks a majority in the upper house and runs only eight out of 29 states. The latter matters, especially because many of the proposed reforms fall under the joint jurisdiction with local governments. Also the upper house has to approve many initiatives, although by calling a joint session - a legal if blunt manoeuvre - PM Modi can bypass that particular hurdle.So implementation will likely take time and deft negotiations by leaders in New Delhi. We expect the main policy push to materialise only next year once the administration is firmly established and has dealt with near-term challenges such as poor rains. Once adopted, it will also take some time before the reforms yield their expected growth dividend. Take the issue of land acquisition. To accelerate spending on infrastructure, an easing of rules is essential. However, states have their say on the matter and the political hurdles are numerous. Often, the promise of extra funds to affected communities can smooth the path of reforms. But India's coffers are dry, rendering the need for consensus building a lot more pressing.
Pre-buying? Auto numbers strong in June
For the month of June 2014, passenger vehicles volumes continued to be on a strong footing. While the ground realities regarding high interest rates, rising fuel prices and weak consumer sentiment have not changed materially, pre-buying was seen as expectations of reversal of excise duty cuts announced in interim budget were rife. Maruti, the leader in the passenger car market, reported 33.5% yoy jump in total volumes driven by both domestic markets (up 31.1% yoy) and export markets (up 58.4% yoy). Amongst segments while all segments witnessed growth the mini segment with a 52.1% jump and vans with a 42.5% yoy jump outperformed other segments. The company has guided for a healthy double digit growth for FY15. For Maruti, UVs were flat while M&M reported an improved performance with only a 2.6% yoy fall. Tata Motors passenger vehicles performance continued to be abysmal as it reported 38.4% yoy slump in its car sales and 9.1% yoy decline in its UV volumes.
Commercial vehicles – M&HCV showing growth
Ashok Leyland reported a 17.6% yoy jump in its M&HCV sales, first time in 25 months. Its LCV sales, however, continued to decline with a 15.2% yoy fall. Eicher Motors also reported a decent show with growth across all categories. While LMD sales were higher by 9.5%, it saw 70.3% jump in its HD vehicle sales. Its bus volumes were robust with a jump of 40.6% yoy.. Volvo truck volumes rose by 61.8% yoy. For M&M its 4W pick up segment which competes with LCVs registered a 2.7% yoy growth. MTBL, M&M’s truck division, also registered a growth of 9% yoy. For Tata Motors though, the story was different with M&HCV declining 13.6% yoy and LCV volumes plummeting 33.2% yoy.
India HSBC June services PMI at 54.4 vs 50.2 in May
Rising from 50.2 in May to 54.4 in June, the seasonally adjusted HSBC Services Business Activity Index was at a 17-month peak. The latest reading was indicative of a solid rate of expansion. Moreover, the index averaged 51.1 in the second quarter of the year, an improvement from Q1’s average of 48.2 and the highest quarterly reading since Q2 2013. Evidence from survey participants pointed to stronger new business inflows and better economic conditions. Output expanded in four of the six monitored categories. The fastest rises were seen in the Post & Telecommunication and Renting & Business Activities sectors. Incoming new orders in the service sector increased for the second consecutive month in June. Having accelerated to the quickest since February last year, the pace of growth was solid. Where new business rose, this was linked to improved underlying demand. New work intakes across the private sector as a whole also expanded at the strongest rate since February 2013...Read More
Monster Employment Index India rises 17% on the Year
"Monster Employment Index marked the sixth month of positive and robust growth in June 2014. The business friendly and stable government has brought in a new ray of hope across sectors. Increased thrust on reviving economic growth, boosting the manufacturing sector and creating more employment has led to growth in India’s business confidence. We have seen an incredible upsurge in online recruitment in the NGO/Social Services sector with a remarkable 44 percent growth, year-on-year, having charted restrained growth rates since July 2013. The Home Appliances sector is emerging closely followed by the Media/Entertainment sector." said Sanjay Modi, Managing Director, Monster.com (India/Middle-East/Hong Kong/South East Asia).
India’s overall M&A activity increased 21.9%
The value of announced mergers & acquisitions (M&A) deals involving Indian companies reached US$20.5bn during the first half of 2014, a 21.9% increase from the first half of 2013. This is the highest first-half period for overall Indian announced M&A since 2011 (US$27.3bn). Deal count slowed down 11.2% to 517 from 582 announced transactions during the first half of 2013. The average M&A deal size for transactions with disclosed values involving India climbed up to US$95.0 million this first half of 2014 compared to US$62.8 million over the same period last year, as more deals were announced during the first half of this year valued US$500-million-and-above. Domestic M&A stood at US$10.1bn, up 295.9% compared to the first half of 2013. This was driven by Sun Pharmaceutical’s pending acquisition of Ranbaxy Laboratories for US$4.0bn in a stock swap transaction. The deal pushed the Healthcare sector to capture 39.6% of India’s domestic activity. Total cross-board M&A dropped 45.5% to US$7.3bn compared to the first half of 2013 as both inbound and outbound activity declined from the first half of 2013. Inbound M&A fell 41.3%, while Outbound M&A decreased 57.8% over the same period last year. Completed M&A deals involving Indian companies totaled US$14.9bn, a 20.7% increase compared to the first half of 2013 (US$12.4bn), and the highest first half period since 2011 (US$20.7bn)...Read More
India slow track: Manufacturing PMI improved marginally in June
HSBC's manufacturing PMI improved a little, supported by a rise in output and new export orders. The future looks bright with reforms expected to fuel the recovery. However, patience is needed. The economy is supply constrained and not demand deficient: a stimulus to growth from the new government could worsen macro-economic imbalances, i.e. inflation and the trade deficit. A gradual recovery is what's needed, providing more time to address supply side bottlenecks in the economy.
May eight core industries growth at 2.3%
The Eight Core Industries have a combined weight of 37.90% in the Index of Industrial Production (IIP).
The combined Index of Eight Core Industries stands at 168.7 in May, 2014, which was 2.3% higher compared to the index of May, 2013. Its cumulative growth during April to May, 2014-15 was 3.3 %.
Coal production (weight: 4.38%) increased by5.5% inMay, 2014over May, 2013. Its cumulative index during April to May, 2014-15 increased by 4.4% over corresponding period of previous year.
Crude Oil production (weight: 5.22%) declined by 0.3% in May, 2014 over May, 2013. The cumulative index of Crude Oil during April to May, 2014-15 declined by 0.2% over the corresponding period of previous year.
The Natural Gas production (weight: 1.71%) declined by 2.2% in May, 2014 over May, 2013. Its cumulative index during April to May, 2014-15 declined by 5.0% over the corresponding period of previous year...Read More
Petrol price hiked by Rs 1.69 per litre, diesel by Rs 0.50
State oil marketing companies has increased the price of petrol by Rs 2 a litre, as rupee has depreciated following unrest in Iraq. Companies has also raised price of diesel by about 56 paise in the Capital.
Report stated that Oil marketing companies,wanted a steeper increase in petrol price, but they settled for Rs 2 a litre hike due to political reasons.
The price of petrol was last increased by about 75 paise on March 1 this year.
LPG price increased by Rs 16.50 per cylinder
The Price of non-subsidised cooking gas (LPG) was hiked by Rs 16.50 per cylinder and jet fuel by over half-a-per cent, according to reports. The increase in rates of non-subsidised LPG and ATF accompanies the Rs 1.69 a litre hike in petrol and 50 paisa a litre in diesel announced.
Report stated that the price of non-subsidised LPG, was raised by Rs 16.50 per 14.2-kg cylinder, the first hike in six months. Each non-subsidised 14.2-kg cooking gas cylinder will now cost Rs 922.50 in Delhi, up from Rs 906, reports Indian Oil Corp (IOC).
Wind and Solar Power: Twin solutions to India's energy problems
This statement above gives a clear idea about the vision of the Government of India towards its energy policy. India is currently the third largest producer of electricity globally, accounting for 4.8% of global share. However, it still is a power-deficit state. The power outages in 2012, on two consecutive days of 30th and 31st July, proved beyond doubt the energy deficiency of a nation. The estimated number of people affected were 620 million, which is close to 9% of the world population. Recently, there was a huge power crisis in the national capital. As per the estimates by Central Electricity Authority (CEA), average month wise power deficit was 8.7% during year 2012-13 (Central Electricity Authority, 2013). In this scenario, it only seems logical that the current modes of production of power are grossly insufficient and there is an urgent need to shift to alternate sources of energy. However, this does not seem to be the case. The monthly All India Installed Generation Capacity Report indicates that Non-Renewable Energy (NRE) power plants constitute about 87.55% of the installed capacity, while the Renewable Energy (RE) power plants constitute the rest. Given the immense need of power production in India, these figures tell a sorry tale. The growth in the need for power and rise in demand can be attributed to some of the factors listed below.
Ecofriendly Residential Architecture: An indispensible paradigm of change
A huge amount of resources go into constructing and maintaining buildings. This is even more so for green buildings, given that there is a premium for having green features. Mumbai consists of 20% of green buildings in India and in fact the number is increasing at a faster rate. The government and the construction industry are proactive and are readily adopting the green building approach for the development of infrastructure. According to a study, in the next 3-4 years about 200 million sq ft of commercial space and 45 million of retail space is expected to be constructed across the major cities of India which indicates that there is a great opportunity for developers and occupiers to promote green buildings. The challenges faced for development of green buildings in India are the extra investment in an unstable real estate market scenario and difficulty in sourcing green building materials...Read More
Are you selling your house? Avoid these mistakes
If you are considering putting up your property for sale there are a few things to keep in mind. Right now it is a buyers’ market. So keep in mind that buyers have plenty of options. We have made it easy for you to sell your house by enlisting a few important points to keep in mind:
Don’t ask for moon: Remember that your house is just one among the many houses on sale. You know what you paid for the house. If the rate in the market has gone below that you cannot expect a price more than that. It is important to understand that your house is worth what the market is willing to pay you. It is a good idea to talk to people. Get a few real estate agents to give you a fair idea on the worth of your house. You may have a mortgage, but that does not affect the market price. Market your flat well: Take as many photos possible. Post an advertisement on every possible website. Get your friends and family to put up information of your plans to sell the house in their office notice boards. Put it up your society notice board. You know never where your buyer is hiding...Read More
Residential Building Redevelopment: Guidelines For Housing Societies
In most metros such as Mumbai, redevelopment of old residential buildings is a normal and desirable occurrence. Without redevelopment, there would be no new supply in the fully developed city centres. Also, redevelopment is necessary because every building has an inbuilt shelf-life, after which it becomes unsafe, unattractive to the market and difficult to maintain. Even now, a number of housing societies in Mumbai are contemplating the redevelopment option. However, the stakeholders of these societies often lack the information they need to make an informed call on which developer to enlist, and what guidelines they should follow before making a commitment. Here is a brief reference guide on what to look and ask for:
Check The Handover Timelines
A developer undertaking the redevelopment of a residential building can legally start the construction process only after he obtains the Commencement Certificate (CC). However, there are a host of other permissions and approvals to be obtained prior to that, together referred to as Intimation of Disapproval (IOD) approvals...Read More
How mixing work and play can motivate employees
Gamification a relatively new word that stands for applying game-design thinking to non-game applications—has been used in several industries and is now making its way into offices. Gartner, a research firm based in Stamford, Conn., predicts that nearly 2000 global organizations will be using gamification to train their employees and track their performance by the end of this year. And in February, IEEE announced that its experts predict that over the next six years, gaming will be integrated into more than 85 percent of daily activities, which include tasks in the workplace. One of the early adopters of gamification in the workplace is the IT consulting and outsourcing company NTT Data, headquartered in Tokyo. In 2011, it developed a video game of on-the-job scenarios that its employees might face to help them learn to make better decisions. Its online "Ignite Leadership" game has a samurai guarding a road leading up a mountain. The employees must reach the summit but face challenges along the way that teach negotiating skills, time management, and problem solving. Players are awarded points for each level they pass; those reaching the top level are also identified as potential leaders for the company. According to the company, more than half the employees participating in the game also advanced to team leadership roles, and this was coupled to a 30 percent reduction in the number of people leaving the company. The game ultimately saved it money on recruitment and retraining...Read More
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