FDI in Various Sectors

As per extant FDI policy, FDI, up to 26% is permitted, in the defence sector, with prior Government approval. Government has, further, interalia announced the following decisions:-

(i) Amendment of certain conditions relating to FDI, up to 100%, in single brand retail trading, vide Press Note No. 4(2012 Series) dated 20.9.2012

(ii) Permitting FDI, up to 51%, in multi-brand retail trading, subject to specified conditions, vide Press Note No. 5 (2012 Series) dated 20.9.2012

(iii) Permitting foreign airlines to invest, in the capital of Indian companies, operating scheduled and nonscheduled air transport services, up to the limit of 49% of their paid-up capital, vide Press Note No.6 (2012 Series) dated 20.9.2012

(iv) Permitting FDI, up to 49%, in power exchanges, vide Press Note No. 8 (2012 Series) dated 20.9.2012

The above mentioned decisions have been incorporated in the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 vide Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) (Sixth Amendment) Regulations, 2012 notified in the Gazette of India: Extraordinary vide G.S.R.795(E) dated 19.10.2012.

It is the Government’s assessment that implementation of the policy is likely to facilitate greater FDI inflows into front and back-end infrastructure; technologies and efficiencies to unlock the potential of the agricultural value chain; additional and quality employment; and global best practices. This, in turn, is expected to benefit consumers and farmers in the long run, in terms of quality and price. The 30% mandatory sourcing condition has been incorporated to encourage local value addition and manufacturing. The increased level of activity, in the front-end, as well as in the back-end, resulting from greater FDI inflows, is expected to create additional employment opportunities for rural and urban youth. It is, further, expected to encourage existing traders and retail outlets to upgrade and become more efficient, thereby providing better services to consumers and better remuneration to the producers from whom they source their products.

The consultations with key stakeholders regarding FDI in multi-brand retail trading brought out views both for and against FDI in multi brand retail trading. On balance, however, the discussions generally indicated support for the policy, subject to the introduction of adequate safeguards. The necessary safeguards have, accordingly, been incorporated in the policy and are expected to protect the interests of various stakeholders. Government has also decided to constitute a high-level group to make recommendations on internal trade reforms, with a view to ensuring distributional efficiencies and also that the benefits from trade are available to all sections of society.

Two proposals have been received for FDI up to 100% in single brand retail trading (from M/s Ingka Holding Overseas B.V, Netherlands and M/s Fossil India Private Limited). Further, seven proposals have been received, for single brand product retail trading, with foreign equity participation up to 51% (from M/s Fapa Company Ltd., Samoa; M/s Promod S.A.S, France; M/s Tommy Hillfiger B.V, The Netherlands; M/s NA Pali Europe SARL; M/s The Semex Alliance, Canada; M/s Le Cruset SAS France and M/s Sketchers South Asia Private Limited). No proposal has been received for FDI in multi-brand retail trading. 

FDI in multi-brand retail and aviation

India opened its retail, aviation, broadcasting and power sectors to foreign supermarkets on September 14, a major economic reform that has been stalled for months by political gridlock and came as part of a package of measures aimed at reviving growth.
Foreign direct investment (FDI) in India's largely unorganised retail sector will help curb inflationary pressure by easing supply side constraints and revive economic growth, analysts said.
However, some experts have the opinion that it could hamper firms hoping to set up shop in the world's second-most populous country.

key aspects of the policy:
States to decide on implementation
Individual state governments will decide whether to allow foreign supermarket chains to enter. The Congress party-led government hopes this will take the sting out of opposition from regional parties who say the policy will destroy jobs.
Opponents of the reform include Mamata Banerjee, the chief minister of West Bengal and the most powerful ally in Prime Minister Manmohan Singh's government.
FOR: Delhi, Assam, Maharashtra, Andhra Pradesh, Rajasthan, Uttarakhand, Haryana, Jammu & Kashmir, Manipur, Daman & Diu and Dadra and Nagar Haveli are in support of the UPA government’s move.
AGAINST:  Bihar, Karnataka, Kerala, Madhya Pradesh, Tripura and Odisha have formally stated their opposition.
Sourcing from small companies
Foreign retailers will have to source almost a third of their manufactured and processed goods from industries with a total plant and machinery investment of less than USD 1 million. Supermarket chains will certify compliance with this themselves.
The government will reserve the first right to procure food produce from farmers before companies do, in order to provide stocks for its food subsidy schemes for poor households.
Minimum investments
Foreign retailers will have to invest a minimum of USD 100 million, and put at least half of their total investment into so-called 'back-end' infrastructure, such as warehousing and cold storage facilities.
This requirement has to be met within three years of a retailer setting up shop.
The aim is to meet one of the key justifications for opening the supermarket sector to foreign players -- revamping the country's crumbling infrastructure and unclogging bottlenecks.
The bottlenecks fan inflation, which has proved a major headache for the government and the Reserve Bank of India.
Policymakers argue opening the sector will help ease prices for a country where hundreds of millions live in dire poverty.
Big cities
Foreign retailers will only be allowed to set up shop in cities with a population of more than 1 million. In states where there are no cities with such a big population, individual state governments can choose where to allow foreign chains to open.
Critics of the new retail policy, including from opposition parties and domestic traders, say opening the doors to the likes of Wal-Mart will wipe out the country's small, family-run neighbourhood stores and trigger mass unemployment.
By restricting foreign firms to cities, the government hopes the supermarkets will become accessible to the country's swelling middle class, while protecting the livelihoods of shopkeepers in smaller towns and rural areas.

Indian Economy: FACTBOX
According to the latest Central Statistical Organisation (CSO) data, the Indian economy grew at a sluggish 5.5 percent in the April-June 2012 period as compared to 8 percent in the corresponding quarter of the previous year.
The GDP growth had slumped to a nine-year low of 5.3 percent in the quarter ended March.
The decision to push forward the reform process has come at a time when business sentiments have taken a beating, GDP growth is near decade low, inflation remained stubbornly high and the government was criticised for "policy paralysis".
India an ideal FDI destination
A recent UNCTAD survey projected India as the second most important FDI destination (after China) for transnational corporations during 2010–2012. India has seen an eightfold increase in its FDI in March 2012.
As per the data, the sectors which attracted higher inflows were services, telecommunication, construction activities and computer software and hardware.
Mauritius, Singapore, US and UK were among the leading sources of FDI for India.
According to Ernst and Young, foreign direct investment in India in 2010 was USD 44.8 billion, and in 2011 experienced an increase of 13 percent to USD 50.8 billion.


FOREIGN DIRECT INVESTMENT IN INDIA

• 51 percent FDI in multi-brand retail

• 49 percent FDI in civil aviation 

• FDI cap in broadcasting raised from 49 percent to 74 percent

• Sale of equities in four PSUs including Hindustan Copper Ltd (9.59 percent), Nalco (12.15 percent), Oil India Ltd (10 percent) and MMTC (9 percent) 

• Foreign investment in power exchanges

• Delhi, Assam, Maharashtra, Andhra Pradesh, Rajasthan, Uttarakhand, Haryana, Jammu & Kashmir, Manipur, Daman & Diu and Dadra and Nagar Haveli are in support of the UPA government’s move

• Bihar, Karnataka, Kerala, Madhya Pradesh, Tripura and Odisha have formally stated their opposition

CCEA clears five more oil, gas blocks

The Cabinet Committee on Economic Affairs (CCEA) cleared five more oil and gas blocks that had been put on offer under the NELP IX round of bidding. The major winners included U.K.'s BG Exploration & Production and BHP Billiton Petroleum (International Exploration) of Australia.

During the New Exploration Licensing Policy (NELP) IX round held in 2010, the government had offered 34 areas for exploration and production of oil and gas. Bids for 33 were received at the close of bidding on March 28 last year. Of these, the CCEA in March awarded 16 blocks to firms such as ONGC while bids for ten blocks were rejected due to bidders offering lesser than expected profit petroleum.

Petroleum and Natural Gas Minister Jaipal Reddy said the CEEA was to consider award of six onland and two offshore blocks but only five blocks were approved.

The Mumbai basin deep sea block MB-DWN-2010/1 was awarded to the consortium of BG Exploration & Production and BHP Billiton Petroleum (International Exploration) of Australia.

The BG-BHP combine beat the consortia of Oil and Natural Gas Corporation (ONGC), Oil India Ltd. (OIL) and GAIL India to the block. The shallow water block MB-OSN-2010/2 in the same basin is due to be awarded to a consortium of OIL, Hindustan Petroleum Corporation and Bharat Petro Resources, which were the sole bidders.

Sources said the required clearance from the Ministry of Defence had been received for exploration in the two offshore blocks.

India’s Retail Inflation declined to 9.86 percent in July 2012

According to the retail inflation data released by Central Statistics Office (CSO), on 21 August 2012, India’s Consumer Price Index (CPI) based retail inflation came down to 9.86 percent in July 2012. The retail inflation number for June 2012 was revised downwards to 9.93 per cent from the provisional estimate of 10.02 per cent.
Prices of vegetables, edible oil, egg, meat, fish, pulses shot up considerably keeping the overall retail inflation high during the month of July.
Inflation rates for rural and urban areas stood at 9.76 per cent and 10.10 per cent in July 2012.

As per the revised data, the inflation rates for rural and urban areas stood at 9.65 per cent and 10.44 per cent in June 2012.
The Wholesale Price Index (WPI) based headline inflation also declined to 6.87 percent in July 2012. The WPI inflation stood at 7.25 percent in June 2012.

A new measure of inclusive wealth

A new measure of “inclusive wealth”, which stretches beyond Gross Domestic Product (GDP) and the Human development Index (HDI), puts India sixth from the top of the 20 selected countries, the economic performance of which was assessed between 1990 and 2008. India’s rise of 4.3 per cent per year in GDP per capita in this period came second only to China, which stood at 9.6 per cent. The Inclusive Wealth Index (IWI) looks at a full range of assets, such as manufactured, human and natural capital, which indicates a country’s true wealth and sustainability.

India recorded 3.8 Percent Unemployment Rate in the Year 2010-11

According to the findings of unemployment survey conducted by the Labour Bureau of the Government of India, the country recorded 3.8 percent unemployment rate in the year 2010-11. The earlier figure (2009-10) was 9.4 percent. The survey was conducted in all 28 states and 7 Union Territories. The findings of the survey were released on 9 July 2012.
As per the survey report the official unemployment rate of the country was 3.8 percent, with urban unemployment and rural unemployment stood at at 5.1 percent and 3.5 percent respectively. Women unemployment at 6.7 percent stood significantly ahead of men unemployment rate which stood at 2.8 percent. The report stated that of those with a livelihood, the majority were self-employed or casual labour. While 48.6 per cent were self employed, 31 per cent were casual labour.
On the basis of social stratum the rates of employment for the SC, ST, and OBC groups stood at 55.9 per cent, 59.7 per cent, and 53.3 per cent respectively, as compared to 48.5 per cent for the general category.
The unemployment rate was found maximum in states such as Goa (16 percent), Kerala (9 percent) and West Bengal (7 percent), while Gujarat (1 Percent) had the lowest number of unemployment rate. Less developed states such as Bihar, Odisha and UP also recorded a moderate unemployment rate.
The data was collected from a sample of 128298 households, while the size of the sample of previous survey was fourth of this size.

E-voting made Mandatory by SEBI for Top 500 Listed Companies of BSE & NSE

The capital market regulator Securities and Exchange Board of India (SEBI) on 26 June 2012 made it mandatory for top 500 listed companies to hold e-voting with an objective to widen shareholder participation in key decisions. SEBI’s decision on e-voting is to be implemented in a phased manner. The implementation will begin by subjecting the top 500 listed companies at the Bombay Stock Exchange and the National Stock Exchange based on market capitalization to e-voting. The structural changes like scrutiny of audit reports as well as e-voting are expected to benefit the capital market in the medium term.
SEBI also decided to create a Qualified Audit Report review Committee (QARC) represented by accounting regulator ICAI (Institute of Chartered Accountants of India) and stock exchanges. The committee would be responsible for processing qualified annual audit reports filed by the listed entities with stock exchanges. The committee will be expected to study reports where accounting irregularities have been pointed out by Financial Reporting Review Board of the Institute of Chartered Accountants of India (ICAI-FRRB).
The regulator relaxed norms for Offer For Sale (OFS). OFS is a new route introduced by SEBI in early 2012 to help companies increase their public shareholding. A minimum gap of two weeks between two OFS issuances was permitted by SEBI.
SEBI made it easier for promoters of listed companies to dilute their stake and comply with public holding rules by 2013.As specified by SEBI, private sector companies and also the state-owned corporations is required to have a minimum public holding of 25% by August 2013.
In the SEBI board meeting, the regulator also announced a simpler share auction mechanism that would help listed companies to attract investors. It provided institutional investors with the option of applying for shares either with 100% margin or with a lesser margin to be fixed by stock exchanges. However in case of the lesser margin being fixed by the stock exchange the bids cannot be changed.
With regards to fulfilling public holding norms, the board decided that issuers will be required to disclose the floor price a day before the share auction.  The floor price may or may not be a part of the notice given by companies on the offer. Investors were barred from modifying or cancelling bids during the last 60 minutes from the close of the bidding session in the auction. Exchanges are required to display the indicative price during the last 60 minutes of the close of bidding session irrespective of the book being built.

Global Financial Services Firm Nomura slashed India’s GDP Projection

Nomura, the global financial services firm, on 26 June 2012 slashed the country's growth forecast for the fiscal year 2012-13 to 5.8 per cent, from 6.7 per cent earlier. Nomura also cut down India’s GDP forecast for 2013-14 to 6.6 per cent from the earlier 6.9 per cent.
The government in its budgetary projection of GDP growth, estimated the growth rate to be around 7.6 per cent in the fiscal year 2012-13. India's economic growth rate slipped to 6.5 per cent in 2011-12, while it had registered 8.4 per cent growth in the previous two financial years.
The global financial services firm also hiked fiscal deficit forecast for India to 5.8 per cent of GDP in the current fiscal from 5.2 per cent. Government in its budget projections aimed fiscal deficit to bring down to 5.1 per cent in 2012-13 from 5.76 per cent in the previous fiscal.

NSSO households Survey

According to the National Sample Survey Organisation (NSSO) study, just 3.5 households per 1,000 families had access to Internet services at home in rural areas in 2009-10.However, in urban areas, Internet connectivity was much better at 59.5 families out of every 1,000 households.Maharashtra was on top with 104 out of 1,000 families having Internet in cities, followed by Kerala and Himachal Pradesh at 95 each and Haryana at 81.5.The penetration of digital services was highest in rural areas in Goa with 50 out of 1,000 households having Internet connection. Kerala came next with 34 families having such a facility at home.

Green Economy

Celebrated annually on 5 June, World Environment Day aims at creating worldwide awareness and encourages political attention and action on environmental issues. World Environment Day thematic celebrations have in the past included caring for the earth and water,  ozone layer, climate change, desertification and sustainable development, etc.

World Environment Day was founded by the UN in 1972 to mark the opening of the Stockholm Conference on the Human Environment. 2012 marks the 40th anniversary of the United Nations Environment Programme and also of World Environment Day (WED), and 20 years since the first UN Conference on Sustainable Development (Earth Summit) in Brazil.

Why Celebrate World Environment Day?

When we see or experience the negative effects of climate change and environmental degradation, it is easy to blame others - for not prioritizing environmental policy; corporate organizations for raising issues like greenhouse gas emissions; NGOs for not lobbying strongly enough for the environment; and individuals for not taking action. World Environment Day however is a day we put aside our differences and instead celebrate the achievements we've made towards protecting the environment.

By celebrating World Environment Day, we remind ourselves and others of the importance of caring for our environment. World Environment Day is celebrated around the world in many ways, including street rallies, bicycle parades, green concerts, essay and poster competitions in schools, tree planting, recycling efforts, clean-up campaigns and much more. The 2012 theme for World Environment Day is Green Economy: Does it include you?

In its simplest expression, a green economy can be thought of as one which is low carbon, resource efficient and socially inclusive.  Practically speaking, a Green Economy is one whose growth in income and employment is driven by public and private investments that reduce carbon emissions and pollution, enhance energy and resource efficiency, and prevent the loss of biodiversity and ecosystems. If the Green Economy is about social equity and inclusiveness, then, technically it is all about us.

The Green Economy touches almost every aspect of our lives and concerns our development. It is about sustainable energy, green jobs, low carbon economies, green policies, green buildings, agriculture, fisheries, forestry, industry, energy efficiency, sustainable tourism, sustainable transport, waste management, water efficiency and all other resource efficiency. These are all elements involved in the successful implementation of a green economy.

The world today is facing a mounting crisis and in recent years we have experienced a combination of a global financial crisis, a food crisis, volatile oil prices, degradation of ecosystem and an unprecedented  climate changes. These inter-related crises challenge the ability of  human population to live peacefully and sustainably on this planet, and demand  urgent attention of governments and citizens around the world. More importantly, as countries across the globe emerge from deep economic recession, it emphasizes the need for a Green Economy that addresses social equity. 

What can be done?

Buildings

Construction and buildings take a large toll on resources and climate. Energy audit can reduce your building's climate footprint and lead to significant savings in energy costs.

Fisheries

Overfishing in many parts of the world threatens to deplete future fish stocks. We can avoid this by working to promote sustainable fishing practices.  Choose sustainably harvested seafood.

Forestry

Deforestation accounts for close to 20% of the world’s greenhouse gas emissions. Sustainably managed forests can continue to support communities and ecosystems without damaging environment and climate. Use electronic files to reduce your demand for paper products. When you support certified sustainable forest products, you support a healthy environment and sustainable livelihoods.

Transport

Riding alone in your car isn't just environmentally and economically inefficient, it's lonely! Car-pooling or taking public transport reduces environmental impacts and economic costs while strengthening community. Walking or riding a bike for short trips is good for your health - and the environment's, too! When you choose alternative transportation methods, you support a Green Economy in the transport sector.

Water

Billions of people worldwide lack access to clean drinking water or improved sanitation services - and population growth will worsen the problem. Taking small steps towards wise water use can help conserve this precious resource. Turn off the tap when you're not using it, wait until you have a full load to run your washing machine, limit shower time, and don't water your lawn right after a rain. Resource efficiency is key to a Green Economy and water is one of our most important resources.

Agriculture

The world’s population stands at 7 billion and may rise to more than 9 billion by 2050.  This means greater pressure on already crowded cities – where more than half of all people now live – and on natural resources, as demand for food, water and energy rises. It's time to support sustainable agriculture to ensure our ability to feed everyone. Grow your own vegetables, and shop at local farmers' markets. When you buy local, organic, and sustainable food products, you send a message to producers that you support a Green Economy for agriculture.

Energy

The current mainstream energy sources - oil, coal, gas, etc. - are not only harmful to health and environment, they're not sustainable in a world of growing energy needs. You can support the development of clean, renewable energy by choosing businesses and products that invest in them - or by investing in them yourself. While we work towards a transition to renewable energy, consider ways to improve your personal energy efficiency. Turn off lights and unplug appliances when you are not using them.                                        

Waste

Recycling appropriate materials and composting food waste reduces the demand on our natural resources.

In this significant year for the environment and sustainable development, the world leaders will once again meet at the United Nations Conference on Sustainable Development twenty years after the historic Earth Summit in Rio de Janeiro, 1992.

Sustainability entails providing opportunity for all by balancing the social, economic and environmental dimensions of development.  We have to rebut the myth that there is conflict between economic health and environment.  With right policies and the right investments, we can protect our environment, grow our economy, generate employment and accelerate social progress.

Moving towards a green economy has the potential to achieve sustainable development and eradicate poverty on an unprecedented scale, with speed and effectiveness. It requires world leaders, civil society and industry to collaboratively work towards this transition. It will also need a sustained effort on the part of policy makers and citizens to rethink and redefine traditional measures of wealth, prosperity and well-being.

White Paper on Black Money

Placed below is a link for White Paper on Black Money:

Click here to see details

60% of rural India lives on less than Rs 35 a day

About 60 per cent of India's rural population lives on less than Rs 35 a day and nearly as many in cities live on Rs 66 a day, reveals a government survey on income and expenditure.

"In terms of average per capita daily expenditure, it comes out to be about Rs 35 in rural and Rs 66 in urban India. About 60 per cent of the population live with these expenditures or less in rural and urban areas," said Director General of National Sample Survey Organisation (NSSO) J Dash in his preface to the report.

According to the 66th round of National Sample Survey (NSS) carried out between July 2009 and June 2010, all India average monthly per capita consumer expenditure (MPCE) in rural areas was Rs 1,054 and urban areas Rs 1,984.

The survey also pointed out that 10 per cent of the population at the lowest rung in rural areas lives on Rs 15 a day, while in urban areas the figure is only a shade better at Rs 20 day.

"The poorest 10 per cent of India's rural population had an average MPCE of Rs 453. The poorest 10 per cent of the urban population had an average MPCE of Rs 599", it said.

The NSSO survey also revealed that average MPCE in rural areas was lowest in Bihar and Chhattisgarh at around Rs 780 followed by Orissa and Jharkhand at Rs 820.

Among other states, Kerala has the highest rural MPCE at 1,835 followed by Punjab and Haryana at Rs 1,649 and Rs 1,510 respectively.

The the highest urban MCPE was in Maharashtra at Rs 2,437 followed by Kerala at Rs 2,413 and Haryana at Rs 2,321. It was lowest in Bihar at Rs 1,238.

The median level of MCPE was Rs 895 in rural and Rs 1,502 in urban India, indicating consumption level of majority of population.

According to the study, food was estimated to account about 57 per cent of the value of the average rural Indian household consumption during 2009-10 whereas it was 44 per cent in cities.

The study reveals that the average monthly per capita consumption of cereals was 11.3 kg in rural areas and 9.4 kg in cities.

Based on NSSO estimates, the Planning Commission had pegged that poverty line at Rs 28.65 and Rs 22.42 daily consumption in urban and rural areas respectively in 2009-10.

As per the Commission's estimates the number of persons living below poverty line was 35.46 crore in 2009-10, as compared to 40.72 crore in 2004-05.

India overtakes Japan to become third-largest economy in purchasing power parity

Its economy may be in the grips of a slowdown, its polity paralysed and markets morose, but all this hasn't prevented India from overtaking Japan to become the world's third-largest economy in purchasing power terms.

Data just released by the International Monetary Fund (IMF) shows that India's gross domestic product in purchasing power parity (PPP) terms stood at $4.46 trillion in 2011, marginally higher than Japan's $4.44 trillion, making it the third-biggest economy after the United States and China.

India's share in world GDP in terms of PPP, a measure of relative consumer prices across countries, stood at 5.65% in 2011 against Japan's 5.63%, with the gap expected to widen significantly by 2017. In five years, the IMF estimates the share of India's GDP in PPP terms would grow to 8.09% compared with 4.8% for Japan.

  "This shows that India is no longer an emerging economy. It has already emerged. But beyond that there are not many conclusions one can take from the data." The PPP system allows GDP comparisons to be made by asking how much money would be needed to purchase the same goods and services in two countries and using that to calculate an implicit foreign exchange rate.

Under this method, a dollar should be able to buy the same amount of goods anywhere in the world and exchange rates should adjust accordingly. It also strips away distortions that come with market exchange rates, which are often volatile, affected by political and financial factors that do not lead to immediate changes in income and tend to understate the standard of living in poor countries.

The Economist magazine's proprietary Big Mac Index, which takes the price of a McDonald burger across 120 countries to calculate the 'real' price of their currencies, is another crude way to measure PPP. India was included in the index recently. It showed that the Indian rupee was undervalued by 62% against the US dollar in January.

PPP methods help adjust income to prices for a meaningful comparison on quality of life in countries with widely different prices and incomes.

"The PPP comparison is more useful while comparing the standards of living between countries," said Ulrich Bartsch, a senior macroeconomist in the World Bank's India office, adding that while the per capita GDP in PPP terms shows that India still has some distance to go to reach Japanese levels, "the difference is less than the comparison of per capita GDP in nominal dollar terms would indicate".

RBI cuts lending rate, loans to become cheaper

After a gap of three years, Reserve Bank Governor D. Subbarao on April 17  slashed short term lending rate by 0.50 per cent to 8 per cent, a move that will reduce the cost of home, auto and corporate loans.

The reduction in the repo rate at which RBI lends to banks, has been prompted by deceleration in growth and softening of inflation.

The cut is aimed at spurring growth to 9 per cent levels, seen before the global financial crisis that began in 2008, Mr. Subbarao said while unveiling the annual credit policy in Mumbai.

“The reduction in the repo rate is based on an assessment of growth having slowed below its post-crisis trend rate, which, in turn, is contributing to the moderation in core inflation,” the Governor said.

RBI has pegged the GDP growth rate for 2012-13 at 7.3 per cent. It is expected to be 6.9 per cent in 2011-12.

After two consecutive cuts since January, the Governor, however, retained the cash reserve ratio at 4.75 per cent.

Mr. Subbarao, however, ruled out further reduction in policy rate in the immediate future citing persistent upside risks to inflation and possible fiscal slippages driven by higher oil subsidies. It expects the inflation to be around 6.5 per cent by March 2013.

“It must be emphasised that the deviation of growth from trend is modest. At the same time, upside risks to inflation persist. These considerations inherently limit the space for further reduction in policy rates,” he said.

The decision is likely to prompt the banks to cut lending rates for home, auto and corporate loans, experts said.

The RBI has raised lending rates 13 times between March 2010 and October 2011 to contain inflation that had been hovering near double-digit.

This had led to clamour by industry to cut rates and spur industrial and economic growth that has slowed down considerably during the past few quarters.

In order to ease tight liquidity situation, Mr. Subbarao announced doubling the borrowing under the Marginal Standing Facility for banks to 2 per cent of their deposits with immediate effect. It also permitted banks to borrow under the MSF even if they have excess government securities holdings.

On the growth front, RBI expects FY’13 to be moderately better than the fiscal gone by. It has pegged GDP growth at 7.3 per cent, which is 0.3 per cent lower than the government projection for 2012-13. Growth in 2011-12 is seen at a 3-year low of 6.9 per cent.

Even though spurring growth has taken the priority at the Mint Road, the RBI continues to be worried about the inflation scenario, calling it as “challenging” due to the sharp spikes in crude prices and food articles in the recent months.

Noting the moderation in manufacturing inflation, the Governor pegged the annual overall inflation target at 6.5 per cent for FY’13 (which is 0.5 per cent lower than its projection for FY’12), saying the price rise will be range-bound through the year.

Inflation was the key driver that guided the Reserve Bank to tighten money supply, and later hold rates during the past 36 months.

The period also saw it inflicting 13 simultaneous hikes, by 3.75 per cent in repo rates over the 19-month period, making it one of the most aggressive central banks in the world.

Apart from hurting investment activity, the rate hikes severely hurt the retail borrowers as higher loan repayments put household budgets for a toss.

The RBI made a conscious effort at placating this class by reiterating that banks should not charge prepayment penalties from home loan borrowers. It also announced to set up a working group to assess the possibility of having long-term fixed interest products which will not be exposed to interest rate changes.

Eight core industries grow by healthy 6.8% in Feb

• Showing signs of recovery, the eight core infrastructure industries grew by 6.8 percent in February on account of healthy coal and power output, up from a dismal performance of 0.5 percent a month ago.

• The core infra grew by 6.4 percent in February last year. 

• The eight industries-- crude oil, petroleum refinery products, natural gas, fertilisers, coal, electricity, cement and finished steel-- have a weight of 37.90 percent in the overall Index of Industrial Production.

• Electricity, coal and cement output grew by 8 percent, 17.8 percent and 10.8 percent, respectively, in February according to the provisional data released Thursday.

• Economists said if this growth rate is maintained for a few more months, it would improve the overall industry output.

• The eight core sectors had grown by a mere 0.5 percent in January, 2012.

Bank of Baroda opened 1001 Ultra Small Branches Across India

Bank of Baroda, the public sector lender, on 22 March 2012 launched 1001 ultra small branches to provide banking services to the people of villages which don’t have access to banling services. The bank launched the ultra small branches under the financial inclusion initiative.
The virtual launch of 1001 ultra small branches was done by K. C. Chakraborty, Deputy Governor, Reserve Bank of India, in the presence of M. D. Mallya, Chairman and Managing Director, Bank of Baroda, at Varanasi.
On the same day, 551 ultra small branches were inaugurated across Uttar Pradesh and Uttarakhand. Bank of Baroda is set to open 1700 ultra small branches in various villages across the country.

Goa got Nationwide Third Rank in Per Capita Deposits

Goa, the smallest Indian state by area and fourth smallest by population, secured a nationwide third rank in per capita deposits. The western state was outsmarted only by the Union Territories of Delhi and Chandigarh.
As per a recent Economic Survey the per capita deposits of Delhi stands at 3.16 lakh rupees, followed by Chandigarh which placed at 2.32 lakh rupees. Goa, which came third clocked at 1.72 lakh rupees.
According to the survey figures the aggregate deposits of Goa recorded a phenomenal growth from 9 crore rupees in 1962, a year after liberation from Portuguese rule, to 26045 crore rupees in 2008-09 and Rs 34165 crore rupees in 2010-11. The total bank deposits of the state as on September 2011 stood at 4617 crore rupees.
Goa is the only State with a low ratio of 4148 population per bank branch, while all the other States and Union Territories have a ratio of above 5000 population per branch.

China becomes top foreign investor in Germany: Trade agency

China overtook the US to become the top foreign investor in Germany in 2011 in terms of investment project numbers, according to statistics released by the Germany Trade and Invest (GTAI) agency Thursday.

Chinese investment projects in Germany have totalled up to 158, ahead of the US' 110, Switzerland's 91 and France's 53, said a statement by GTAI, the economic development agency of the German government, reported Xinhua.

In a latest sign of the strong Chinese investment tide in Germany, automotive supplier Heibei Lingyun Industrial Group Corporation earlier this week agreed to buy Kiekert, a German maker of latch systems for cars.

Early this year, Chinese construction equipment manufacturer Sany Heavy Industry wound up acquisition of Putzmeister, a German engineering firm.

The deal has been deemed as one of the biggest investment projects in the mechanical manufacturing and engineering sector, the pillar industry of the German economy.

More than half of the total foreign investments in Germany still come from the European countries, according to the GTAI.

Economic Survey of India 2011-12: Highlights

The economic survey 2011-12 was presented in the parliament by the Finance Minister Pranab Mukharjee on 14 March 2012. According to the economic survey 2011-12 the Indian GDP pegged at 6.9% in the fiscal year 2010-11. Figure for the agriculture, services and industry sector stood at 2.5%, 9.4% and 4-5% respectively. The survey, which is presented annually by the Ministry of Finance, of government of India, maintained that the Indian economy despite global slowdown remained exuberant and was among the fastest growing economies of the world.

Given below are the highlights of economic survey 2011-12

•    Growth Rate is estimated to be 6.9%. Outlook for growth and stability is promising as the real GDP growth expected to pick up to 7.6% in 2012-13 and 8.6% in 2013-14.
•    At 2.5 %, Agri sector performed well. Services sector grew by 9.4 %, its share in GDP grew up to 59%.
•    Industrial sector growth stood at 4-5 %
•    Inflation on WPI which was on a upward trajectory in the initial part of the year witnessed a sharp slow down by the year-end.
•    WPI food inflation dropped from 20.2% in February 2010 to 1.6% in January 2012. The low inflation rate is likely to improve promote investment
•    India remains among the fastest growing economies of the world. Country’s sovereign credit rating rose by a substantial 2.98 percent in 2007-12.
•    Fiscal consolidation on track - savings & capital formation expected to rise.

• Exports grew 40.5% in the first half of this fiscal and imports grew by 30.4%.
• The trade deficit stood at 8% of the GDP. 
• Forex reserves enhanced - covering nearly the entire external debt stock

•    Central spending on social services goes up to 18.5% this fiscal from 13.4% in 2006-07.
•    MNREGA coverage increases to 5.49 crore households in 2010-11.
•    Sustainable development and climate change concerns on high priority.

Half of India's homes have cellphones, but not toilets

Though half of all Indians do not have a toilet at home, well over half own a telephone, new census data released.

These and many other contrasting facts of life have come out in Census 2011. The data on housing, household amenities and assets cast new light on a country in the throes of a complex transition, where millions have access to state-of-the-art technologies and consumer goods — but a larger number lacks access to the most rudimentary facilities.

It shows Indian society is overwhelmingly made up of nuclear families. They have ever more access to electricity and gather their information from television, rather than radio. At the same time, women are forced to rely on traditional smoky fuels to cook, and less than a third of the population have access to treated drinking water.

Only 46.9 per cent of the total 246.6 million households have toilet facilities. Of the rest, 3.2 per cent use public toilets. And 49.8 per cent ease themselves in the open. In stark contrast, 63.2 per cent of the households own a telephone connection — 53.2 per cent of mobile phones

Releasing the data, Registrar-General and Census Commissioner C. Chandramouli said the lack of sanitary facilities “continues to be a big concern for the country.” “Cultural and traditional reasons,” he argued, “and lack of education seemed to be the primary reasons for this unhygienic practice. We have to do a lot in these areas.”

However, the data also show significant deficits in areas that have nothing to do with cultural practices or poor education. For example, two-thirds of households continue to use firewood, crop residue, cow dung cakes or coal for cooking — putting women to significant health hazards and hardship.

The data also show that just 32 per cent of the households use treated water for drinking and 17 per cent still fetch drinking water from a source located more than 500 metres in rural areas or 100 metres in urban centres.

There has been an 11 percentage point increase in households using electricity, from 56 per cent to 67 per cent. The rural-urban gap for this indicator has dropped by seven percentage point, from 44 per cent to 37 per cent.

India, the data show, is now overwhelmingly made up of nuclear families — a dramatic change from just a generation ago, where joint families were the norm. Seventy per cent of the households consist of only one couple. Indian families are overwhelmingly likely — 86.6 per cent of them — to live in their own houses, but 37.1 per cent live in a single room.

Though there has been a nine percentage point jump in the numbers of households who own a two-wheeler, 45 per cent own a cycle, which remains the primary mode of transport.

The data cast light on the changing character of the media. There has been a 16 per cent increase in the number of households watching television, but a 15 per cent decline in the use of radios and transistors. A total of 47.2 per cent of households own a television; only 19.9 per cent have either radio or transistors.