Sunday, December 23, 2012
Indian electronics hardware production constitutes only around 1.3% of the global hardware production and it is estimated that demand of electronics products and systems in India is expected to grow to US$400bn by 2020. This was stated by Kapil Sibal, Union Minister for Communications and IT, while addressing the Consultative Committee meeting of the ministry. He pointed out that at the conventional rate of growth of domestic production, it would only be possible to meet demand of about USD 100 Billion by 2020. The Government recognizes that sustaining growth in IT and telecom is hugely dependent on our ability to foster Electronics System Design and Manufacturing (ESDM) in the country, he added. The minister said that while there have been concerted efforts for rapid growth of the electronics (including telecom) hardware manufacturing sector in the past like 100% FDI permitted under automatic route, no Industrial license requirement, these efforts have not led to a substantial impact. He also pointed out that given India’s growing strength in chip design and embedded software, the increasing importance of design in product development has the potential to make India a favoured destination for ESDM. The minister went on to outline some of the initiatives that have been taken for the development of electronics (including telecom) hardware manufacturing in the country: National Policy on Electronics (NPE) 2012 National Telecom Policy – 2012 (NTP-2012) Electronics Manufacturing Clusters (EMC) Scheme Modified Special Incentive Package (M-SIPS) Scheme Setting up Semiconductor Wafer Fabrication Units Preference to Domestically Manufactured Electronic Goods (Preferential Market Access) Notification by the Department of Telecommunications (DOT) on 5th October 2012 for Government Procurement and Government funded projects Electronics Development Fund (EDF) Scheme for mandatory registration of identified Electronic Products for meeting specified safety standards Export Promotion Scheme for ESDM Industry According Priority Sector Status to IT purchases Declaring Mobile phones as goods of special importance under the CST Act, 1956 Communication and Marketing Members of Parliament attending the meeting raised a number of issues concerning posts, telecom and IT. Members underlined the need for adequate number of post offices. Some members also pointed out the problem of connectivity on BSNL, especially in rural areas and on highways. A member raised the issue of the difficult conditions of Dak Sevaks. A member raised the issue of inadequate handling of e-waste and desired a sysem be created for dumping of e-waste. A member welcoming the initiative to encourage ‘electronics manufacturing’, urged for strengthening the existent public sector industry. The following members of Parliament were present at the meeting: PK Biju, Sanjay Nirupam, SG Naik, Shivraj Singh Lodhi and Vinay Pandey. Also present were Minister of State for Communications and IT, Dr. (Smt.) Kruparani Killi, Secretaries for the Departments of IT, Posts and Telecom and other senior officers of the ministry of Communications and IT.
The Union Finance Minister, P. Chidambaram said that the Government is fully committed to provide best possible facilities to the tax payers for better tax compliance and revenue augmentation. He said that our focus is always to have a reasonably stable tax regime which is in the interest of both the tax payers as well as tax collectors. The Finance Minister Chidambaram was speaking at the 5th Meeting of Consultative Committee attached to his Ministry here. The agenda of the meeting was ‘Facilitation for Tax Payers’. The Finance Minister stressed the need for systematic changes including strengthening of the tax information system for better collection of taxes. He said that at present 3.5 crore people are filing income tax returns. Only 14.6 lakh people have declared their income of Rs. 10.00 lakh and above for tax purposes which is not realistic. The Finance Minister informed that we have moderate rate of income tax as compared to various developed countries. Our peak rate of taxation is 30% at present. Therefore, there is lot of scope for better tax compliance and tax collections, the Minister added. The Finance Minister informed that about 50% tax payers are filing their return through e-mode. He said that there is a need for more and more tax payers to electronically file their return as it well help in expediting tax processing and refund process. The Finance Minister informed the members that during last year i.e. 2011-12, till this time, refund of Rs. 70,000 crore was made which included arrears for the previous year(s) while during the current year i.e. 2012-13, refund to the tune of Rs. 57,000 crore have been made. He said that the target for collection of direct taxes for the current year i.e., 2012-13 is fixed at Rs. 5,70,251 crore. The Members of the Consultative Committee present in the meeting suggested various measures for improving relationship with tax payers. Some members suggested that efforts be made to keep the tax rates low for better compliance. Some suggested that interest on refund may be paid at least at the bank rate of interest. Some Members suggested for widening of tax base for higher revenue collections. Some Members said that tax facilitation centres be opened in rural areas which in turn will help in increased revenue generation. Tax awareness campaign for payment of due taxes on time may also be undertaken in the local language.
The party season just got more exciting! Thomas Cook (India) Ltd, India’s largest integrated travel and travel related financial services company, announced its "Top 10 List" for New Year 2013, from its luxury brand ‘Indulgence’. Thomas Cook India’s internal research and trend analysis predicted strong demand for holidays for the Year end- more so from its luxury segment. Added to this was the growing demand for recommendations for New Year breaks that would pique their discerning yet eclectic palate. The Top 10 List from Thomas Cook India’s luxury brand ‘Indulgence’ endeavours to do just that, with ten hand-picked destinations from must-do favourites like Sydney, New York, Bali and Paris to new entrants like Vietnam and Rio and then for a truly different and off-beat experience- Nha Trang (Vietnam), Koh Phangan (Thailand), Edinburg and The Niagara Falls. The travel fervor builds momentum with the approach of the New Year, and in recognition of the trend towards unique engagements & off beat experiences, "Indulgence" by Thomas Cook India invites its customers to usher in the New Year in style. Be it a spectacular midnight fireworks display at Sydney Harbour Bridge, witnessing the first rays of the rising sun at Gisborne, New Zealand, the cosmopolitan vibe of Cape Town’s waterfront, Bali’s heady party scene, torch-light street parades or the Grand Hogamanay Ball in Edinburg, New York’s bustling Times Square to beachfront celebrations at Nha Trang, Vietnam, and the pulsating rhythms of Rio’s Copacabana revelry, Thomas Cook India offers you the best New Year indulgent experiences. Madhav Pai, Director – Leisure Travel (Outbound), Thomas Cook (India) Ltd. says, "With our bookings up by an impressive 50%, the growing demand for New Year breaks is clearly a trend that we at Thomas Cook India are keen on leveraging. With a diversity of unique travel experiences and innovative activities, we are confident that The Top 10 List from our luxury brand ‘Indulgence’, will help our customers select a year-end holiday filled with unforgettable memories"
Chief Economic Advisor Raghuram Rajan has proposed a three-pronged strategy and the proposition of a bold budget to put the economy back on high growth track. He briefed the reporters on the Mid-Year Economic Analysis which was tabled in Parliament on Monday. The analysis presented a bleak projection of growth for the current financial year at 5.7-5.9 % as opposed to 7.6% earlier. This would be the slowest growth rate in nearly a decade. Rajan said that growth is likely to improve to 6% in the second half from 5.4% of April-September first half on factors like improved better industrial output numbers, corporate profitability, business confidence and moderating inflation. "We can not be satisfied with this (5.7-5.9 per cent) rate of growth. So, we are not at the end of set of steps we need to take... we are at the end of the beginning," he said. "Further steps include a good confidence inducing budget, speeding up clearance for projects, and further steps in capital market reform," Rajan said . "Strengthening of financial infrastructure is important. Improving corporate bond market is also what we need to do. Number of measures we need to take including the vibrancy of equity market, ability of equity market market to finance infrastructure requirement needs to looked at," he said. On tax collections he said "Corporate profit earnings are not growing at pace, it was growing in past. We hope we will start picking up once again and that should add buoyancy. People are not making money as much as they were then clearly it is going to impinge on that kind of revenue," He was of the opinion that achieving budget targets in case of corporate tax and customs and central excise would be "somewhat difficult given the trend so far", as per mid year analysis. According to Rajan, the government would have to find new ways to boost growth so as to improve increase corporate tax profitability and tax collection. He added "Given the tight Budget situation, perhaps structural reforms can be made (to boost industry), instead of fiscal sops," On meeting fiscal deficit target of 5.3%, he said it would be difficult to achieve the same while on the disinvestment he said that the recent pick up in PSU stake sale will have positive impact on the receipts. "5.3 percent is a tough target. It would be a difficult target to reach. The focus is meeting target. It would add confidence ... The investor community sense that the path the Finance Minister has laid down on fiscal consolidation is also achievable," he said. On government expenditure he said "We have to be as careful as we can to avoid damage to growth. We have a fiscal envelope that is not going to increase and we have to stay within that. So, we have to find out in which way to achieve that". He said," I would like to see some changes in the business environment... Creating a better business environment for small and medium enterprises," .On further reforms he said the government should first fix the fiscal situation and ensure proper implementation. He said that there are signs beginning of stabilization, "Corporates are sitting on lot of liquidity. If profitability is increasing, then that gives them the signal that it is time to invest some more.. Lot of projects can be unveiled if they find more confidence in the economy," he said
The Government has tabled the Mid-year economic review in Parliament. The Government is expecting the economy to grow between 5.7-5.9% in the current fiscal, which is much lower than 7.6% projected in the Mid-Review Economic Survey. The Finance Ministry also estimates inflation to moderate to 6.8-7% by March 2013. It also says that trade deficit would not be significantly higher than last year. "Given , an emerging scenario, it should be possible for the economy to improve the overall GDP growth rate to around 5.7-5.9% for the year 2012-13," said the Mid-Year Economic Review tabled in Parliament. The economy, would have to record a growth rate of 6% in the second half of the current financial year to reach the desired growth rate. To achieve 5.7-5.9 per cent growth, the review said: "Both fiscal and monetary policy, however, would need to be supportive to sustain investor confidence. The Government will also have to address the concerns relating to structural supply side bottlenecks.'' Agriculture is expected to improve because of better prospects with rabi crops benefiting from greater moisture content in the soil and dominance of irrigated wheat and rice crops.
What the RBI did was more or less in line with market expectations. Although a section of the markets and India Inc. wanted a CRR cut, lack of announcement on the same wasn’t a surprise for sure. The RBI hinted at a shift in stance towards pro-growth measures Indian markets declined for the second week running, as investors digested news flow from India and its global peers, even as they wait for the Government to introduce important reforms. The market appears to be in a sort of uncertainty with some kind of year-end fatigue. Christmas is round the corner but no signs of a Santa Claus rally here. Nifty has been stuck in a trading band of 5,800-5,960 for last two weeks so a breakout either side is anxiously awaited to determine the near term direction. Global cues also were not supportive as fiscal cliff issues continue to overshadow any other economic news. In the coming curtailed week, volatility is likely to escalate due to F&O expiry.
The Reserve bank of India (RBI) in its mid-quarter review of monetary policy kept policy rates unchanged on Tuesday. RBI has been decided to keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.25% of their net demand and time liabilities; and keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8.0 per cent. Consequently, the reverse repo rate under the LAF will remain unchanged at 7.0 per cent, and the marginal standing facility (MSF) and the Bank Rate at 9.0 per cent. In its second quarter (July-September) policy review, RBI noted that Headline WPI inflation edged down to 7.2% in November, mainly owing to softening of prices of vegetables, minerals and fuel. On the other hand, prices of cereals and protein-based items such as eggs, fish and meat firmed up further. Significantly, core (non-food manufactured products) inflation eased, aided by decline in prices of metals, cement and chemicals. On domestic growth front, RBI observed some "indications of a modest firming up of activity in October-December quarter. GDP growth in Q2 of 2012-13 at 5.3% was marginally lower than 5.5% in Q1. The recent policy initiatives by the Government and further reforms should help to boost business sentiment and improve the investment climate. As regards inflation, excess capacity in some sectors is working towards moderating core inflation. Furthermore, the easing of international commodity prices, particularly of crude, is expected to impart some softening bias to the evolving inflation conditions if it is not offset by the impact of rupee depreciation. The Reserve Bank is closely monitoring the evolving growth-inflation dynamic and will update the formal numerical assessment of its growth and inflation projections for 2012-13 as part of the third quarter review in January 2013. The Reserve Bank is closely monitoring the evolving growth-inflation dynamic and will update the formal numerical assessment of its growth and inflation projections for 2012-13 as part of the third quarter review in January 2013
Domestic and global woes weighed on the market sentiments this week. The Sensex fell 0.38% and the Nifty lost 0.54% for the week ended December 21, 2012. Major Headlines: RBI leaves rates unchanged FDI inflows rises 67% in October Investments into P-notes surge in last 8 mths Foreign exchange reserves swell $484.2 mn India's deficit on track; Growth forecast lowers
Broader market seems to be on a correction mode or at least would remain choppy ahead of the December series expiry
Rollover to the January series have already started, but it is still not clear whether it is on the long side or on the short side… but the nifty option segment indicates huge drag for the nifty in the week ahead S&P nifty & nifty future and Futures & Option segment volumes