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Economic Notes |
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Inflation unchanged at 12.14 per cent: Inflation remained unchanged at 12.14 per cent for the week ended September 13 even as the Finance Ministry said prices of essential items like cereals, pulses, sugar and edible oils declined on weekly basis. High inflation of 12.14 per cent, which is the same as the previous week's figure, has prompted analysts to say that price rise will remain at double digits by the end of this calendar year due to base effect. Inflation figure remained intact despite a low base of 3.51 per cent in the year-ago period. The Finance Ministry said in a statement here that inflation of 30 essential items declined to 7.58 per cent during the week under review compared to 7.72 per cent in the previous week. While prices of food items like salt, sea fish, tea, fruits, condiments and spices rose, rates of imported edible oil declined, giving some relief to the government which was unable to control its prices because of rise in global rates.
Among manufactured goods, items like tobacco, rubber, chemicals, mineral and machinery turned dearer.
Inflation in double digit till Jan – Sen: India's inflation will remain in double digits until the end of January in part due to higher prices of manufactured products, the chief statistician said on Thursday. "Headline inflation will remain in double digits until January due to base effect and higher prices of manufactured products," Pronab Sen, secretary at the ministry of statistics and programme implementation, said. Annual inflation rate was at 12.14 per cent on Sept. 6. Data later on Thursday is expected to show it rose to 12.33 per cent as at Sept. 13, a Reuters poll of analysts found.
Forex reserves see $2.51-b spike: The foreign exchange reserves increased by $2.51 billion to touch $291.972 billion for the week ended September 19, according to figures released by the Reserve Bank of India’s Weekly Statistical Supplement. For the week ended September 12, the reserves increased by $650 million to $289.461 billion. In the week under review, foreign currency assets increased by $2.509 billion to $282.811 billion. A forex dealer attributed the increase in the reserves primarily to the strengthening of the dollar against the euro in the overseas markets. Gold reserves and SDRs were unchanged at $8.692 billion and $4 million respectively. The reserve position in the IMF increased by $2 million to $465 million. Bank credit increased substantially by Rs 32,914 crore to Rs 24,91,248 crore as on September 12. Food credit increased by Rs 847 crore to Rs 45,190 crore and non-food credit increased by Rs 32,067 crore to Rs 24,46,058 crore.
WaMu becomes biggest bank to fail in US history: As the debate over a $700 billion bank bailout rages on in Washington, one of the nation’s largest banks - Washington Mutual Inc. - has collapsed under the weight of its enormous bad bets on the mortgage market. The Federal Deposit Insurance Corp. seized WaMu on Thursday, and then sold the thrift’s banking assets to JPMorgan Chase & Co. for $1.9 billion. Seattle-based WaMu, which was founded in 1889, is the largest bank to fail by far in the country’s history. Its $307 billion in assets eclipse the $40 billion of Continental Illinois National Bank, which failed in 1984, and the $32 billion of IndyMac, which the government seized in July. One positive is that the sale of WaMu’s assets to JPMorgan Chase prevents the thrift’s collapse from depleting the FDIC’s insurance fund. But that detail is likely to give only marginal solace to Americans facing tighter lending and watching their stock portfolios plunge in the wake of the nation’s most momentous financial crisis since the Great Depression. Because of WaMu’s souring mortgages and other risky debt, JPMorgan plans to write down WaMu’s loan portfolio by about $31 billion _ a figure that could change if the government goes through with its bailout plan and JPMorgan decides to take advantage of it.
HNIs in India up 23%: Study : The number of High Networth Individuals (HNIs), with investible surplus of more than $1 million, in India has gone up by 23 per cent to 1.23 lakh as of December 2007, according to a DSP Merrill Lynch and Capgemini report.
The combined wealth of the HNIs has increased to $440 billion during this period. The average networth of the Indian HNIs has gone up to $3.6 million, while the global average is $4 million. The factors that have led to the surge in the number of HNIs are the “rapid economic expansion, increased foreign investment, increase in the savings rates and gains on the country’s stock markets”, stated the report. HNIs in India have invested 36 per cent of their assets to equities. The number of Ultra-High Networth Individuals (individuals with an investible surplus exceeding $30 million) in the country at the end of 2007 was 1,081. Their combined wealth jumped to $116 million. “Our analysis shows that in 2007, India’s HNI population experienced the highest growth worldwide in 2007, expanding it by 22.7 per cent”, said Mr Salil Parekh, Chief Executive Officer, Capgemini India. According to the report, the number of HNIs in the Asia Pacific region has increased to 2.8 million during this period, which is an increase of 8.7 per cent compared to the global growth rate of six per cent.
“Despite dislocations in developed markets, the number of HNIs here grew at a faster rate than the global average. Domestic demand and Asia’s appetite for commodities continue to drive wealth accumulation in India”, said Mr Pradeep Dokania, Head of Global Wealth Management for DSP Merrill Lynch.
US announces debt plan to ease financial crisis: The United States said on Thursday last it was putting together a rescue plan to clear away the mountains of bad debt that have weighed down banks and caused the worst financial crisis in decades. The announcement came as leading central banks moved to flood markets with cash while British and US regulators put the brakes on short-selling shares, as nations banded together to try to end the turmoil on global markets. US stocks staged a dramatic rally on rumours about the new plan, with the Dow Jones average recovering 3.86 percent Thursday. Asian markets followed Wall Street's lead, gaining broadly after days of turmoil and brutal sell-offs. US Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke met with Congressional leaders late Thursday night, vowing to move swiftly amid fears that more banks could go under as the crisis deepens. Paulson did not give details, stressing any plan would need Congressional approval, but US media reports said he was considering a bailout by taxpayers like that used in the savings and loan crisis of the 1980s and 90s.
HCL counters Infosys’s bid for Axon: HCL Technologies on Friday made a counter bid of 650 pence a share compared to 600 pence offered by Infosys to buy UK-based consultancy firm Axon. Under the terms of offer, Axon shareholders will receive 650 pence in cash for each share valuing the entire issued and to be issued share capital of Axon at 441.1 million pounds (814.38 million dollar), HCL said in New Delhi. HCL’s offer is 8.3 per cent more than Infosys which had valued the Axon Group at 407.1 million pound. Axon provides process consultancy services to large organisations which have chosen SAP as their strategic enterprise platform. The company has a customer base across UK, North America and Asia. With employee strength of 2,000, Axon had reported profit before tax of 29.5 million pound and revenues of 204.5 million pound for the year ended December 2007.
Fitch places debentures of DSP Merrill Lynch on watch: Global rating agency Fitch placed DSP Merrill Lynch Capital Ltd's Rs 1,500-crore guaranteed long-term debenture programme on Rating Watch Evolving (RWE) following the decision to acquire Merrill Lynch by Bank of America earlier this week. "This action follows the placement of the company's ultimate owner Merrill Lynch & Co on RWE as a result of the proposed acquisition by Bank of America this week," Fitch said in a release. DSP Merill Lynch is 90 per cent owned by US-based Merrill Lynch. It said the company's national long-term ratings are based on an explicit guarantee from the parent firm Merrill Lynch. The RWE would be resolved once adequate clarity emerges over the status of this guarantee under the new corporate structure, it said.
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