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Economic Notes |
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Inflation rises marginally to 12.14%: Having shown some moderation during the past three weeks, inflation rose marginally to 12.4 per cent as on September 6 from 12.1 per cent recorded a week earlier. Inflation rose mainly on account of the rise in primary and food articles. The moderation in inflation during the past weeks can partly be attributed to the decline in international prices of crude oil and edible oils following the improved supply side conditions. However, despite a significant decline in global oil prices, with domestic prices of LPG, petrol and kerosene being regulated, it would take some time for inflation in fuel group to moderate substantially.
Forex reserves fall by $6.5 billion: India's foreign exchange reserves fell by $6.498 billion to $288.811 billion for the week ended September 5 from $295.309 billion in the previous week. This was primarily due to a fall in the foreign currency assets (FCA) which slid to $279.626 billion compared to $286.117 billion in the previous week.
FCAs expressed in the US dollar terms include the effect of appreciation or depreciation of non-US currencies such as the euro, sterling and yen held in reserves, RBI said.
Gold reserves and special drawing rights during the week remained static at $8.692 billion and $4 million respectively.
Rupee rises after RBI helps boost inflow: Rupee rose sharply last Wednesday after posting its biggest single-day fall on the preceding Tuesday, supported by RBI’s move to make rates on deposits by non-residents more attractive. A commitment by the Reserve Bank of India (RBI) to continue intervening to support the rupee also helped the rupee to gain strength. After the rupee touched a two-year low of 46.89 against a US dollar, the Reserve Bank of India stepped in with dollar supply. It also injected liquidity into the market by relaxing norms under which banks keep part of their deposits in government securities. The RBI move had an impact on rupee which appreciated by a massive 62 paise on Wednesday in early trade. Although about 15 per cent depreciation in rupee is giving a boost to exports, it has made imports expensive leading to concerns in the government battling over 12 per cent inflation.
Excise duty collections on target: The Government is confident of meeting the indirect tax collection target of Rs 3.2 lakh crore during 2008-09, even as it pointed towards tardy growth of excise duty mop up due to duty cuts on petrol, diesel, besides misuse of exemptions given to certain areas.
Duty neutralisation benefits for SEZ developers: Supply of goods from domestic tariff area (DTA) to special economic zone (SEZ) developers against payments made in rupees will now be entitled for duty neutralisation benefits, enabling the SEZ developers to procure goods from domestic manufacturers at international prices. According to L.B.Singhal, Director General of Export Promotion Council for EOUs and SEZs (EPCES),“The DGFT move would encourage SEZ developers to procure goods from domestic manufacturers rather than importing and this would in turn encourage domestic manufacturing and backward integration of SEZs’.
Crude production begins at KG basin: Reliance Industries has begun crude oil production from the nation's first deep-sea oilfield in Krishna Godavari basin. Block KG-DWN-98/3 or D6 will be the first area in deep-sea to produce crude oil since India opened up its oil hunt programme for private and foreign players in 1999 with the advent of New Exploration Licensing Policy (NELP).
TCS signs five-year IT contract with Ericsson: Country's largest software exporter Tata Consultancy Services has signed a five-year global contract with Swedish company Ericsson to deliver application maintenance and development services. TCS said it has been selected as one of the two strategic partners that will deliver application maintenance services to Ericsson and a preferred supplier for application development services. The company recently bagged a multi-million dollar five-year contract from Singapore Airlines Cargo to service its cargo revenue accounting back office processes. Earlier, the company has won a five-year engagement with NXP Semiconductors valued at 100 million dollar to provide applications and consultancy services exclusively for the semiconductor company.
Rs 200 cr Tata Tele plan for N-E: Tata Teleservices has planned an investment of Rs 200 crore for rollout of its services in north-eastern states. The company is very bullish about the north-east.
IMF predicts 2009 recovery despite current financial turmoil: The International Monetary Fund has sought to put a positive spin on the current financial turmoil in the US, predicting the world's advanced economies will stage a slow recovery by 2009 even as financial firms face potential bankruptcy. "While the events of the past week underscore the seriousness of the situation, my message today is straightforward: this storm can be weathered without a damaging global recession," IMF Deputy Managing Director John Lipsky said last Thursday in Washington. "The most likely outcome is that the financial turmoil still underway in many advanced economy markets will not by itself prevent a gradual recovery in economic activity in 2009," Lipsky said. This week has seen Wall Street stocks plunge as Lehman Brothers Holdings Inc declared bankruptcy and US insurance giant American International Group Inc (AIG) was effectively taken over by the US government.
BankAm sees India growth opportunities: Bank of America has expressed confidence that its $50-billion acquisition of Merrill Lynch would provide the bank with significant growth opportunities in India. In an investor presentation webcast to discuss the deal, Bank of America Chairman and CEO Ken Lewis and Merrill Lynch chief John Thian said Merrill Lynch had been focusing on growth in India and the deal would result in “significant growth opportunities” in wealth management and investments businesses in the country. Merrill Lynch had been the market leader in India with full local capabilities and there had been a significant expansion since increasing the stake in DSP Merrill Lynch, the Indian entity, to 90 per cent, they said.
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