สรุปข่าวเศรษฐกิจอินเดียประจำวันที่ 15 มกราคม 2557

AAP concerned about middlemen, not common man: Anand Sharma

Commerce and industry minister Anand Sharma today lashed out at the Delhi chief minister Arvind Kejriwal and his Aam Admi party saying that they are more concerned about the interest of the middlemen and not the common man for their decision to restrict foreign direct investment (FDI) in multibrand retail trading (MBRT). Referring to Kejriwal’s decision of withdrawing FDI in MBRT in Delhi as “irresponsible, ill-considered, abrupt and arbitrary” Sharma said their argument that allowing FDI in MBRT will result in widespread job losses in “laughable” while he admitted to receiving a communication from the Delhi CM in this matter. He said, on the contrary, tens of thousands of jobs will be created in the rural as well as urban areas in processing, sorting and packaging. Sharma said once a policy gets notified, it cannot be withdrawn and that the government has to follow a due process after examining their demand. The Aam Aadmi Party (AAP), on a high since the Assembly elections in December, could lose out on its stand to withdraw the Delhi government’s support to foreign direct investment (FDI) in multi-brand retail. While there are chances the Centre might have its way on letting Delhi remain a destination for foreign supermarkets, the possibility of the AAP government falling over the retail FDI issue is not being ruled out either. Ahead of the general elections this year, the Centre will have to decide on opposing AAP on this issue, especially as loss of jobs is the argument being raised against FDI in multi-brand retail. On the retail FDI issue, a possibility being talked about in the corridors of power is the Congress might withdraw its support to AAP in Delhi. This will result in a defeat of the government when the Delhi budget has to be passed through a vote in the Assembly. Defeat of a money Bill means the government will have to resign. A no-confidence motion was ruled out, as it couldn’t be introduced in the same session twice, experts said. Many in favour of retail FDI are poll-bound this year. These include the Congress-ruled Andhra Pradesh, Maharashtra and Haryana. Other states/Union territories supporting FDI in this segment are Manipur, Assam, Karnataka, Himachal Pradesh, Uttarakhand, Jammu & Kashmir, Daman & Diu, Dadra and Nagar Haveli.

(Source: Business Standard)

FM's solution to fiscal deficit: Earn now, spend next year

Among the finance ministry’s efforts to contain the fiscal deficitthis year, it appears, is some financial jugglery. Much of the additional expenditure is being rolled over to next financial year, while the tax and dividend income to accrue next year is being brought forward into this year’s books. The aim is to ensure the fiscal deficit ‘red line’ drawn by Finance Minister P Chidambaram— of 4.8 per cent of gross domestic product — is not breached. Tax officers are reportedly asking companies to make higher advance tax payments and, if their actual profits turn out to be lower than projections, take refunds next year. If refunds are high, this would mean an extra burden on the next government, as the finance ministry pays interest at 0.5 per cent per month, or six per cent a year, on refunds to taxpayers. For companies, this means the money that could have been invested elsewhere lies idle.Companies make advance tax payments in four instalments — in June, September, December and March. For the quarter ended December 2013, the government’s advance tax mop-up grew 8.8 per cent over the same quarter the previous year, compared with seven per cent in the year-ago period.It is learnt that while refunds for income tax, central excise and service tax have also been moderated by the finance ministry, higher advance tax payments are an arrangement between the taxpayers and the local tax commissioners. The finance ministry, however, officially denies any attempt to hold back refunds or putting pressure on companies for higher advance tax to rein in fiscal deficit. Chidambaram had in 2013 sold the magical number of 4.8 per cent to foreign investors, who had raised doubts over India’s fiscal consolidation plan. But, with lower tax and non-tax income and higher subsidies, the task would have been difficult. So, these income-generating and expenditure curtailing measures had to be adopted, said officials.

(Source: Business Standard)

RBI should not focus only on prices, say Bimal Jalan, YV Reddy

India's former central bank chiefs don't quite favour the Reserve Bank of India (RBI) adopting a purely inflation-targeting approach and prefer caution when it comes to legislating full autonomy of the bank. The RBI had come under fire for not being able to tamp down on inflation which has been at elevated levels for over five years and Congress party chief Sonia Gandhi had attributed high prices as one of the reasons for the recent defeat of the ruling UPA government in state elections. However, both Bimal Jalan and YV Reddy indicated that they were not in favour of an inflation-targeting central bank in India. This could pose problems when people look to a politically elected government to be accountable for inflation management. And if the RBI were to be mandated explicitly for this and if the RBI failed on that count, it could well impact credibility of the institution, he reckons.

(Source: Economic Times)

Economy to limp, but CAD to stay low in FY15: India Ratings

India is unlikely to recover fast enough and the GDP growth will inch up to 5.6% in 2014-15 (as against 4.9% this fiscal), India Ratings said on Tuesday. The current account deficit is likely to remain low at 2.2% of GDP this fiscal and next, the agency said, while warning of some fiscal slippage despite continuing reforms. India Ratings & Research, an unit of Fitch Ratings, expects some uptick in investment due to project clearances by the Cabinet Committee on Investment (CCI). However, given the sluggish domestic and external environment, India Ratings said "unlike the recovery witnessed during the aftermath of the 2008 global financial crisis, the FY15 recovery is likely to be gradual. In other words, the probability of a V-shaped recovery is nearly zero." Agricultural growth is likely to return to the trend growth rate of 3% in FY15 from the estimated 4.7% in FY14, it said, adding industrial growth may improve to 4.1% in FY15 as against 1.7% in FY14 helped by rural consumption and exports demand. Stable agricultural growth in FY15 is likely to keep rural demand strong. Though the outlook for the Indian economy is now looking significantly better than what it did in mid-2013, when the economy was struggling with current account and fiscal deficit, falling rupee and high and stubborn inflation, India Ratings said "better-than-expected monsoons, rising exports, swift policy as well as project clearance actions by the government and deft currency management by the Reserve Bank of India have improved business sentiments." India Ratings expects CAD to settle at around 2.2% of the GDP in both FY14 and FY15. "This will support the rupee, which is likely to appreciate from the current levels to 56-57/dollar by end-March 2015."

(Source: Financial Express)

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