สรุปข่าวเศรษฐกิจอินเดียประจำวันที่ 17 กุมภาพันธ์ 2557

Thailand based company to invest Rs 571 crore in Punjab

Thailand-based company Charoen Pokphand will set up five modern units including feed mill in the field of poultry and pig farming with capital outlay of Rs. 571.20 crore. A memorandum in this regard was signed between the Punjab government and the company here on Saturday, said an release. A spokesperson said a delegation of Charoen Pokphand (Thailand) Company led by its Vice-Chairman Chaiyaporn Montha called on Punjab Chief minister Parkash Singh Badal at his residence on Saturday afternoon and apprised his company's decision to invest in Punjab. As per the plan, the company will set up a feed mill at a cost of Rs. 120 crore, a hatchery at Rs. 24 crore, a breeding farm at Rs. 102 crore, a broiler farm at Rs. 324 crore and a swine farm Rs. 1.2 crore in the state, release quoting Montha said. The CP Group intended to commence commercial production by the year 2014 and complete the proposed investment by the year 2018.Badal assured the company that the government would extend full support and cooperation to the company for further setting up their operations in the state. He also asked them to initiate some project in the field of fishery particularly in the waterlogged areas of Punjab. Regarding the issue of importing animals for setting up of a swine processing unit in Punjab, Badal said that this issue was under the jurisdiction of the Union Government. However, he offered that in this regard the state would write to the Centre in favour of the company whenever needed.He said that SAD-BJP government was fully committed to boosting allied farming in the state to enhance the profitability to the farming community.

(Source: Economic Times, Times of India, Hindustan Times)

Interim Budget 2014: FM P. Chidambaram may succeed in reining in fiscal deficit

Despite the economic slowdown, Monday’s interim Budget will likely show the Centre’s FY14 fiscal deficit being a trifle lower than the projected 4.8% of GDP. It could also reveal that the revenue deficit target of 3.3% has not been met despite unexpected gains from the 2G spectrum auction and the milking of Coal India and some other cash-rich PSUs. Finance minister P. Chidambaram may announce a 4.2% fiscal deficit target for FY15 and gross marketing borrowings for the year at close to Rs 6 lakh crore, figures likely to be reviewed by the next government in July’s full-year Budget. The markets have seen a 920.55-point fall so far in 2014 and could somewhat discount the interim Budget’s borrowing numbers. Like last year, Chidambaram appears to have leashed in growth-inducing capital expenditure to report that his deficit-cutting plan hasn’t faltered. Given the restraint even in FY12, this implies a flattening of capital spending growth (negative growth in real terms) for three consecutive years. The task before the next government, whatever its political hue, will primarily be to restore revenue-led fiscal consolidation seen between 2005 and 2008 during the UPA-I regime. Even the Reserve Bank of India has been skeptical about the sustainability of reining in the fiscal deficit through cuts in productive spending. However, with niggardly growth in tax revenue due to the economic slowdown, a spurt in interest payments and grossly inadequate controls on subsidies, the minister has had few other options. Tax revenue, which accounts for over four-fifths of the Centre’s revenue receipts after transferring a third of the collections to states, is believed to have grown at a much lower rate than the targeted 19.2% (during April-December, gross tax receipts grew 9.15% only; of course, as is customary, the last few weeks could see collections pick up, but the gap is too big to be bridged). For the government’s finances to really improve, the revenue to GDP ratio has to be taken to 25% from 18% (Centre and states) now. This needs higher GDP growth and a broadening of the tax base (from 35 million now to 50-60 million), for which implementation of tax reforms like the goods and services tax and Direct Taxes Code without diluting their basic tenets is necessary. The open-ended food security law is inimical to the efforts to curb revenue expenditure. Effective steps to curb oil and fertiliser subsidies and improve targeting of these to the really needy are also called for. These are, however, options before the next government, which also has to find resources to implement the steep salary increases for government employees likely to be recommended by the Seventh Pay Commission. The Sixth Pay Commission had increased salaries by 21%, causing an additional annual outgo of Rs18,000 crore for the Centre, besides a one-time payout of arrears of Rs 30,000 crore.

(Source: Financial Express)

Vote on Account 2014: P Chidambaram unlikely to roll out any populist measures

Politicians have a knack of pulling rabbits out of a hat, but the chances are overwhelming that Finance Minister Palaniappan Chidambaram will present an unremarkable vote on-account to the Lok Sabha on Monday, deliberately bereft of populist measures or tax concessions, despite the imminence of a general election. Chidambaram was very clear last year that inflation must be tackled since voters hated it. He also said the people would be upset by any credit downgrade by international rating agencies, since this would not only tarnish the country's image but also lead to a crashing rupee and higher inflation. Both would be vote-losers. These priorities led to him to emphasise, above all, the need to keep the fiscal deficit within the budgeted ceiling of 4.8% of GDP. Despite a serious revenue shortfall, he will surely announce that he has met his target, and maybe achieved even less than 4.8% of GDP. However, the markets know that he will achieve this by financial legerdemain. Since Congress is headed for its worst defeat in the coming election, Chidambaram's budget speech will be a swansong. He will present a stirring account of the great feats of UPA over the past decade while airbrushing the steep fall in growth and rise in inflation in the past three years. Voters will not be impressed, as he well knows.

(Source: Economic Times)

Don't expect major announcements in interim budget

Finance Minister P Chidambaram may dole out some sops while doing a tightrope walk to keep the fiscal deficit under check when he presents the interim budget for 2014-15 in Parliament tomorrow ahead of the Lok Sabha elections. Along with the budget, he will present a vote-on-account to seek Parliament's sanction for spending till July. By tradition, the interim budget does not contain proposals seeking to tinker with direct taxes, nor are there any policy announcements, although there may be some sops for the common man and sectors that need help. Earlier, Chidambaram had indicated he may tweak excise duties and service tax rates in the interim budget in an apparent bid to boost the economy, but he may not pursue key reform legislation due to lack of political consensus. The minister is expected to use the opportunity to highlight the achievements of the UPA-II government and focus on how the government has been able to contain the fiscal deficit and the current account deficit (CAD), notwithstanding the difficult global situation.

(Source: Economic Times)

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Royal Thai Embassy