India wins slowdown battle in 2009

New Delhi: India achieved the distinction of being the second fastest growing economy amid the global recession in 2009, but the joy was marred by the decade's sharpest rise in food prices to the chagrin of common man.
For a country that continued to lose on its exports throughout the year that has gone by, economy achieved a remarkable growth of about seven per cent (during April-September 2009) on the back of focused government stimulus in tandem with well articulated interest rate-cum-monetary policy of RBI.
But it is a paradox of sorts that price line that dipped from a 13-year high into negative zone at one point during the year climbed sharply again, with food inflation touching more than a decade's high of 20 per cent.
From the growth focus, the government had to concentrate on fighting the natural disaster ranging from drought to floods in different parts of the country that led to shortages of foodgrains and fruit and vegetable and the resultant spurt in their prices caused a political storm.
To add to this roller coaster, developments in the economy, including in the share market, the general elections in May that helped Congress led UPA to retain power, lent further colour.
In the New Year, fear of rising inflation will continue to influence the economic policies, whether it is monetary review to be announced by the RBI on January 29 or the Budget to be unveiled by Finance Minister Pranab Mukherjee towards the end of February.
Powered by strong doses of three stimulus packages, the Indian economy did well, only next to China in terms of growth. Despite widespread drought and devastating floods in parts of the country, the economy during 2009-10 is estimated to expand by 8 per cent, up from 6.7 per cent in the previous fiscal.
India's growth during 2008-09 dipped from 9 per cent on account of the impact of the global financial crisis.
Stimulus, green shoots and exit policy will continue to remain the buzzwords as the government in the coming year will move forward to withdraw the extraordinary steps it took to fight the impact of global meltdown, domestic drought and spiraling food prices.
The focus of economic planners during the initial months of 2009 was to continue the stimulus to tide over the impact of financial crisis triggered by collapse of America's iconic banker Lehman Brothers in September 2008.
Not waiting for the election results, Mukherjee, while presenting an interim budget inFebruary 2009 provided the third stimulus package to the industry to by announcing tax cuts and raising public expenditure

No immediate hike in fuel prices: Govt

New Delhi: The government has no immediate plans to raise fuel prices, petroleum secretary said on Tuesday, after a newspaper report that auto fuel prices could be raised early next year.
"There is no such proposal yet," Petroleum Secretary R S Pandey said, when asked to comment on the news report.
India previously raised fuel prices by as much as 10 per cent in July, when global crude oil prices were hovering at about $70 a barrel.
US crude for February delivery fell 28 cents to $78.49 a barrel by 0332 GMT.
State-run refiners sell petrol, diesel, kerosene and cooking gas at low government-fixed rates to control inflation and help the poor, and receive partial compensation from the government

Economy to grow by little over 7 pct: PM

Economy is likely to grow by seven per cent or a ‘little more’ in the current fiscal returning to a fast expansion pace after a sluggish 2008 due to the global economic crisis, Prime Minister Manmohan Singh said on Sunday. "The momentum (of growth) was ...interrupted by the global economic crisis in 2008 and we slowed down to 6.7 per cent in 2008-09 and are likely to achieve seven per cent or a little more in 2009-10," Singh said, inaugurating the 92nd Annual Conference of the Indian Economic Association (IEA) in Bhubaneswar.
Joining the debate on the impact on reforms on poverty, Singh said opening up of the Indian economy have had no adverse effect on the poor and the percentage of population below the poverty line continued to decline.
"There is no evidence that the new economic policies have had an adverse effect on the poor. However, I would readily agree that what has been achieved is not enough. Much more needs to be done and the decline should have been faster than we have experienced," he said.

Food prices fuel inflation pressures: RBI

Mumbai : Rising food prices are fueling concerns of broader price pressures in India and the policy challenge is to address the supply-side constraints, a deputy governor at the Reserve Bank of India said on Monday.
"Since supply shocks take time to taper off, there is a risk that high inflation in essential commodities could affect inflation expectations over time and give rise to generalized inflation," Shyamala Gopinath said in a speech delivered in Bangalore on Monday.
The Reserve Bank released her speech on Tuesday.

IMF to visit Dubai in coming weeks

Washington : An International Monetary Fund team will visit Dubai in coming weeks to look closer at the economic impact of the Dubai World debt crisis and actions needed to resolve it, a senior IMF official said on Monday.
In an interview with Reuters, IMF Director for the Middle East and Central Asia Masood Ahmed said the visit was an opportunity for the IMF to update and conclude its 2009 assessment of the United Arab Emirates.
Dubai has been shaken by the debt troubles at government-owned Dubai World, which is currently meeting creditors to delay payment on $26 billion in debt, damaging the reputation of the Gulf Arab business hub.
Ahmed said the impact of the crisis appeared contained after a week of concerns among international investors that the crisis could spread. While those worries have subsided, the crisis is likely to have longer lasting effects for the UAE and some of its neighbors.
Ahmed said from now on lenders would likely demand more financial transparency from government-backed companies trying borrow money on their own standing and would also call for clarity on the nature of guarantees on quasi-sovereign debt.
"Lenders and investors will want to look at their balance sheets, their profit/loss statements, their liabilities and assets, in the way they would for any other borrower," Ahmed said on the sidelines of the Arab Global Forum, a meeting of the private-sector in Washington.
"In today's market place, companies that provide financial information should be able to attract capital on more attractive terms," he added.
Ahmed also said there will probably be a period of uncertainty around regulations and legal frameworks of sukuk, or Islamic bonds.

FICCI says no to mandatory CSR

New Delhi: Apex industry body Ficci has suggested that the government should encourage companies to invest in corporate social responsibility initiatives by giving tax incentives instead of making it binding.
"The government may consider incentivising CSR( corporate social responsibility) activities perhaps through tax incentives...create a market for CSR credits like carbon credits," Ficci said in its CSR draft on which the Ministry of Corporate Affairs has invited comments from the public by December 10.
The industry body also suggested that CSR activities should not be made mandatory and companies should be encouraged to adopt the norms on voluntary basis.
"If such a compulsion (of CSR) is imposed on companies...it may turn counter productive as companies may resort to camouflaging activities to meet such regulations, particularly, during recessionary periods and economic downturns," the chamber argued.
Earlier, Corporate Affairs Minister Salman Khurshid had said issues like the annual spend on corporate social responsibility (CSR) would be debated by the Parliamentary Standing Committee, which is scrutinising the provisions of the new Companies Bill tabled in Lok Sabha in August.
"We need to go beyond affirmative action and CSR efforts could be given a fillip through fiscal relief... these issues need to be debated threadbare for their possible incorporation in new Bill," Khurshid had said.

Indian Oil loses Rs 94 cr/day on fuel sale

New Delhi: State-run Indian Oil Corporation said it is losing Rs 94 crore per day on sale of petrol, diesel, domestic LPG and kerosene below the cost.
"The refinery margins have come down and we are yet to get bonds to make up for the under-recovery (revenue loss) on LPG and kerosene," IOC Chairman Sarthak Behuria said.
IOC, he said, was currently losing Rs 94 crore per day on selling the four products below cost. "For the full fiscal, we estimate Rs 26,490 crore revenue loss on the four products."
The company and other public sector fuel retailers Bharat Petroleum and Hindustan Petroleum are currently selling petrol at Rs 3.68 a litre below cost and diesel at Rs 2.90 per litre lower than cost. They make a loss of Rs 18.13 a litre on kerosene and Rs 250.67 per 14.2-kg domestic LPG cylinder.
Current refining margins are about USD 3 a barrel, he said.
IOC, BPCL and HPCL have not been given oil bonds for the losses they made on selling LPG and kerosene during the first three quarters of current fiscal.
"We have written to the Petroleum Ministry and we understand they have taken this up with the Ministry of Finance. Hopefully, we will get the oil bonds soon," he said.
IOC is to get Rs 11,852 crore worth of oil bonds for the three quarters while BPCL and HPCL would get a combined Rs 9019 crore worth of government bonds.
The government had earlier this year decided to compensate the oil firms for the losses they make on selling LPG and kerosene below cost by way of oil bonds. The same on petrol and diesel are to be met through contribution from upstream firms like Oil and Natural Gas Corp (ONGC).
The industry is projected to lose Rs 45,820 crore on the four products in the fully 2009-10 fiscal.