สรุปข่าวเศรษฐกิจอินเดียประจำวันที่ 19 ธันวาคม 2556

Raghuram Rajan keeps key rate unchanged but vows prompt action if prices don't ease

Reserve Bank of India Governor Raghuram Rajan took the market completely by surprise on Wednesday, keeping the key policy rate unchanged in the face of overwhelming expectations that it would be raised, citing the tenuous state of the economy and hopes that food prices may be declining. The central bank's move to hold the repo rate at 7.75%, the reverse repo at 6.75%, the cash reserve ratio at 4% and the marginal standing facility and the bank rate at 8.75% followed what seemed to be strong signals that an increase was all but inevitable in the face of unrelenting inflation. Rajan has raised the repo rate twice by 25 basis points each since taking over in September. India is struggling with sluggish economic growth, which dropped to a decade-low 5% in the year to March. Growth was 4.4% in the first quarter of this year and 4.8% in the second, and getting the FY14 figure back at last year's levels or past that will need a more robust second half, something that both Finance Minister P Chidambaram and Rajan expect.

(Source: Economic Times)

Implementing GST to benefit food processing industry: Sharad Pawar

Agriculture Minister Sharad Pawar said the processed food industry is facing problems due to the existing tax regime and hoped the implementation of the proposed GST would benefit the sector. On growth potential of non-alcoholic beverages sector, he said major players are planning to invest around USD 10 billion by 2020 in this segment and advocated reforms at state level to make the sector globally competitive. Goods and Services Tax (GST), touted as India's most far-reaching indirect tax reform, aims to remove barriers to movement of goods and services across states. Pawar also released an ICRIER (Indian Council for Research and International Economic Relations) report that suggested major reforms including GST for improving global competitiveness of Indian non-alcoholic beverages sector.

(Source: Economic Times)

Lokpal Bill may hurt luxury market

The passage of the Lokpal Bill in the Lok Sabha and the expected clampdown on graft may be good news for most individuals and corporates, but there are fears it may slow down sale of luxury products such as watches, wines and expensive holidays. It is believed that gifting of luxury products is a popular means of bribing. Another factor that has kindled the fear of luxury sales being impacted is that a lot of luxury purchases are cash transactions and much of it is 'black money' or undeclared in tax filings. Stating that authorities such as the customs department are now keeping a close watch on luxury purchases and require PAN to be provided while shopping for expensive items, people are increasingly cautious about spending 'black money' for fear of getting caught. The general consensus is that if the drive against graft and black money strengthens, then India may mirror what has happened in the Chinese luxury market.

 (Source: Economic Times)

Tesco needs to invest $ 55 mn in back-end if proposal okayed

Tesco, which has sought the government's permission to buy 50 per cent stake in Tatas-owned Trent Hypermarket Ltd, will have to invest atleast $ 55 million in creation of fresh back-end infrastructure. The UK-based firm's has applied to the Department of Industrial Policy and Promotion (DIPP) to invest $ 110 million to engage in multi-brand retail trading in partnership with Trent Ltd The application, however, has raised confusion as to whether such investments could be made in an existing domestic multi-brand retail firm under the current FDI policy. Official sources said that as per the current policy, a global retailer would have to invest 50 per cent of its total investment in fresh back-end infrastructure, while it is free to invest remaining amount on either new stores or acquiring existing chain. Industry experts point out that there is an ambiguity on the policy regarding this matter and it needs clarity. The Department of Industrial Policy and Promotion (DIPP) under the Ministry of Commerce and Industry will scrutinise the Tesco's application and forward it soon to the Foreign Investment Promotion Board (FIPB) for its approval.

(Source: Economic Times)

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