สรุปข่าวเศรษฐกิจอินเดียประจำวันที่ 26 กันยายน 2556

Why Indians love it when government makes gold expensive

Government of India makes gold more expensive by hiking duties four times in 20 months, hoping this will deter citizens of India from holding more gold. But not only does gold remain attractive for Indians, expectations of a high price regime have increased its attractiveness. This is not a perverse outcome. It's more a case of wrong official logic. High prices dampen demand for a product or a service. But expectations that an asset class will get pricier can increase demand for that asset. Gold is an asset class. Plus, sharp rupee depreciation has also made gold holdings more attractive. Investors who expect gold price to rise say they will invest the same amount of money even if they buy a few grams less - the only risk, ironically for the government, is that import duty may come down at some stage. The World Gold Council's data for April-June this year shows higher appetite for gold in India, despite government measures to curb demand. Consumer demand was 310 tonne, up 71% on last year. Bar and coin investment rose 116%, while jewellery demand rose by 51%. Indians still believe that gold is a safe investment product. So, duty hikes can't check gold consumption, People will keep on buying, more so when high prices mean better returns. In rural India, where banking penetration is low, affluent farmers typically park 50% of their surplus funds in gold.Gold is extremely precious to them and they see it an easy route to get liquid cash. In case of any crisis they mortgage the gold with the local moneylender to get easy cash.

(Source: Economic Times)

Developers sitting on denotified SEZ land eye greener pastures

Land acquisition may continue to be a hurdle despite Parliament approving the new Land Acquisition Bill, but the country’s top corporates are sitting on around 2,200 hectares that have become available after they denotified their special economic zones (SEZs) due to unattractive tax policies. Reliance Industries, Parsvnath and Kalyani Group, among others, have denotified their SEZs, freeing up over 1,300 hectares which they can now develop for industrial or commercial purposes. The possibility of alternative use will depend on whether the land was acquired by the corporate or the government on their behalf and the policies of respective state governments. Of the 392 notified SEZs as on July 31, 2013, 58 have been denotified. Most were denotified in the last two years due to MAT and DDT. However, the reasons given by the developers for denotification include the global economic slowdown, poor market response, non-availability of skilled labour force, lack of demand for space and changed fiscal incentives regime for SEZs. If private land is being denotified, then it remains with the developer but if government land is being denotified, and it is not being used the way is was supposed to be in the stipulated time period, then it has to be surrendered

(Source: Financial Express)

Three Indian policies effecting defense trade: US industry

Amid steps taken by the Obama administration to compress timeline and share defence related technology with India, the US defence industry has expressed frustration over three critical Indian policies, which they claim has the potential to affect the bilateral defence trade. Based on the feedback received from the defence industry in both the countries, the Pentagon has been informed that the three critical issues are the unfeasible delays and extension on letters of offer and acceptance; lack of post-delivery risk allocation and limitations of liability and finally difficulty for US industry to execute offset commitments.

(Source: Economic Times)

Before polls, govt sets up pay commission

Call it a poll compulsion or genuine desire to help government servants, the Centre on Wednesday decided to constitute the seventh pay commission for its five million employees and three million pensioners — three years before the commission’s recommendations will actually take effect. “Prime Minister (Manmohan Singh) has approved the constitution of the seventh Central Pay Commission,” Finance Minister P Chidambaram said in a statement. According to officials, the move might soon be followed by a decision to increase the retirement age of government employees to 62 years from the current 60. The key area that the sixth pay commission focused on was removing the ambiguity in various pay scales and reducing the number of scales. For that, it introduced running pay bands for all government posts. It had recommended pay hikes of 20-40 per cent and also suggested a new system of four pay bands with 20 grade pays which was accepted with minor changes.

(Source: Business Standard)

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