The Indian economy has
continuously recorded high growth rates and has become an attractive
destination for investments, according to Ms Pratibha Patil, the Indian
President. "Today India
The wealth of high net
worth individuals (HNIs) in India, is set to grow by a compounded annual growth
rate (CAGR) of 23 per cent over the next four years and will touch a staggering
Rs 249 trillion (US$ 5.05 trillion), highlighted a report by Karvy Private
Wealth - the wealth management arm of the financial services firm Karvy Group.
THE
ECONOMIC SCENARIO
Innovation and
efficiency are the keys to boost the growth of exports from the country,
according to Mr M Veerappa Moily, Union Minister for Corporate Affairs. He also
suggested that there is a need to develop innovation centres at the district
levels to boost exports.
· Exports from special economic zones (SEZ) grew by 17 per cent to
Rs 260,973 crore (US$ 52.99 billion) during April-December 2011 from Rs 223,132
crore (US$ 45.31 billion) during the corresponding period in the previous year,
according to a statement by the Export Promotion Council for Export-oriented
Units and SEZs (EPCES)
· The total amount of foreign direct investment (FDI) equity inflows
during April 2011- November 2011 stood at US$ 22,835 million, according to the
latest data published by Department of Industrial Policy and Promotion (DIPP)
· The Government of India has approved 20 proposals of FDI worth Rs
1,935.24 crore (US$ 392.94 million), according to an official statement. The
approvals were given, based on the recommendations of the Foreign Investment
Promotion Board (FIPB)
· "India 's
GDP is expected to grow at 7.7 per cent, which clearly underlines India
· India
· Indian employers have emerged as the most optimistic, as far as
hiring goes, among 41 countries surveyed by the Manpower Group, a world leader
in the workforce solutions
· The revenues from the Indian media and entertainment (M&E)
industry is expected to reach over US$ 25 billion in the next four years, according
to an Ernst & Young report 'Spotlight on India's Entertainment Economy.'
Growing digitisation, media consumption and improving demographics are the most
important drivers responsible for the growth of this industry
· The Indian handset market witnessed a 14.1 per cent growth in 2011
to touch a total volume of 182 million handsets. The total handset volume is
expected to reach 335 million units by 2017, according to ABI Research, a
US-based market intelligence company
· Smartphone shipments touched 10 million units in the first eleven
months of the calendar year 2011, according to a report titled 'India Monthly
Mobile Handsets Market Review', by CyberMedia Research (CMR). Total 3G phone
shipments touched 15.5 million in the first eleven months of 2011, according to
CMR analysts, with close to 224 models launched by 26 vendors. Moreover, the
multi-SIM mobile handset shipments accounted for 54 per cent of the total India
· In addition, the Indian banking sector is poised to become the
world's third-largest in terms of assets over the next 14 years—with its assets
poised to touch US$ 28,500 billion by 2025—according to a report titled 'Being
five-star in productivity—Roadmap for excellence in Indian banking', prepared
for the Indian Banks' Association (IBA) by The Boston Consultancy Group (BCG),
IBA and an industry body
· The entire textile and apparel industry in India
· Driven by fashion trends, many Indian consumers now spend as much
on footwear as on apparels, as they associate variety of shoes to different
occasions. The footwear industry in India
· The Indian food processing industry is set to triple to reach US$
900 billion by 2020, provided the key issues are addressed, as per a study by
Boston Consulting Group (BCG) and an industry body
UNION BUDGET 2013-14:
HIGHLIGHTS
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Union Budget for the Fiscal Year 2013-14 was
presented by the Finance Minister Mr.P.Chidambaram on 28th February 2013. Prepared against the
backdrop of an overall deceleration in the economy the FM was expected to do
a balancing act of encourage savings and investment, bridging CAD deficit,
revive the economic growth, boost investor sentiments, attain fiscal targets
and yet deliver a politically acceptable Budget. Budget was prepared after
considering pre-budget memoranda from various business groups. In the
Budget there are echoes of some of the suggestions made by the Economic
Survey released on 27th February
2013 which inter alia suggested
growth revival through investment route, broad-basing of taxes instead of
hike in tax rates, raising private investment in agriculture, achieving
fiscal consolidation etc. Considering the socio- politico-economic
compulsions the FM has delivered a non-exciting yet sensible Budget.
Highlights of the
Budget are as follows.
Select Budget
Statistics
· Before going into the provisions of the
Budget, the FM provides the economic context in which the Budget was prepared
i.e. slowdown in global and domestic economies. Yet FM is not pessimistic. In
fact, he perceives 13.4% nominal GDP (at market prices) growth in FY 2013-14. Assuming a 7% inflation, the real growth works to around 6.4% which is in the range of 6.1-6.7% estimated
by the Economic Survey 2012-13.
· The Budget seems to have taken cue from some
of the suggestions made by the Economic Survey with respect to the measures
for reviving economic growth, stimulating savings and investments and
formulating the tax policy. The Survey, among other things investment-led
growth, no increase in tax-rates, widening of tax-base, improving tax-GDP
ratio etc .
·
Tax
Proposals:
(I) Direct Taxes:
Personal Tax
By and large there are
no changes in basic income slabs or the rates. Accordingly the tax rates will
be:
New Proposals:
Tax Credit: A tax credit of
Rs.2,000 is provided for the assessees falling in the category of
Rs.200,000-500,000.
Surcharge:
10% surcharge on the
assessees (individuals, HUFs, firms, entities with similar tax status) whose
taxable income is more than Rs.1 crore per annum.
Corporate Tax:
Though the corporate
tax rates remain unchanged the Budget proposes anincrease in the surcharge
from 5% to 10% on domestic companieswhose taxable income is more than
Rs.10 crores per year.
In the case of foreign
companies, the surcharge is increased from 2% to 5%.
In all other cases,
like dividend distribution tax and tax on distributed income the surcharge is
raised from 5% to 10%
The additional
surcharges will be in force only for one year 2013-14.
(II) Indirect Taxes:
NO change in the peak
rate of customs duty from its current
levels of 10% on non-agricultural products. Similarly, normal rate of excise duty and
service tax are retained at their current level of 12%.
Budget Proposals and
Economy:
Savings, Investment
& Growth:
Recognizing the adverse
impact of sharp decline witnessed in the savings and investment rates in
recent years on the overall economic growth, the FM has proposed several
measures to prop-up savings and investments. They include:
Savings:
·
Liberalization of Rajiv Gandhi Equity Savings
scheme. Raising the income limit from Rs.10 laca to Rs.12 lacs.
·
Additional deduction of interest upto Rs.1 lac
on housing loan upto Rs.25 lacs taken during 2013-14.
·
Introduction of Inflation Indexed Bonds or
Inflation Indexed National Security Certificates.
Investment:
·
Emphasis on infrastructure investment.
Encouraging Infrastructure Debt Funds (IDFs). India Infrastructure Finance
Corporation along with ADB to offer credit enhancement to infrastructure
companies that wish to tap o=long term bond market.
·
Regulatory authority for road sector to
address issues relating to financial stress, construction risk, contract
management issues etc.
·
Investment Allowance of 15% available as
deduction for the investment of Rs.100 crores or more in plant and machinery
during 2013-15.
Infrastructure:
·
Funding support for industrial corridors;
Deli-Mumbai, Chennai-Bengaluru and Bengaluru-Mumbai
·
Awarding of 3,000 kms of road projects in
Gujarat, MP, UP,
·
Rs.14,873 crores allocated for JNNURM to
mainly to purchase 10,000 buses especially by the hilly states.
·
Two new ports in
·
Review of oil and gas exploration policy.
Encouraging shale gas exploration and production. Clearing of stalled blocks.
Capital Market:
There are several
proposals in the Budget which can impact capital market. Such major proposals
are:
·
Removing ambiguity in the definition of FDI
and FII. Foreign investment with a stake of 10% or less will be treated as
FII and more than 10% will be FDI.
·
Permitting FIIs: (i) to trade in exchange
traded currency derivatives and (ii) using their corporate bonds and
government securities as collateral securities.
·
Allowing SMEs to list on SME segment of stock
exchanges without making IPOs subject to the condition that the issue will be
restricted to informed investors.
·
Allowing stock exchanges to introduce
dedicated debt segment
·
Allowing mutual fund distributors to become
members of mutual fund segment of stock exchanges.
·
Enlarging the list of eligible securities for
Pension Funds and Provident Funds by including exchange traded funds, debt
mutual funds and asset backed securities.
·
Securities Transaction Tax (STT) reduced on equity futures (0.017 to 0.01%) and Mutual Fund
Redemption at fund counters (from 0.25% to 0.001%) and Mutual Fund
sale/purchase on exchanges (from 0.1% to 0.001%).
·
A final withholding tax of 20% on
profits distributed by unlisted companies through buyback of shares.
Banking &
Insurance:
·
Additional funding to the tune of Rs.14,000
crores for capital infusion in public sector banks to enable them meeting
Basel III norms.
· Higher funding for National Housing Bank for
rural and urban housing.
· A multi-pronged approach to increase the
penetration of insurance –life and general.
· A comprehensive and integrated social security
package for unorganized sector.
Budget & Fiscal
Reforms:
·
A Draft Bill on Goods and Service Tax and
Constitutional Amendment Bill to be introduced in the next few months.
·
Contentious issue pertaining to GAAR postponed
to 2016.
·
Proposal to achieve 3% Fiscal Deficit Ratio
and 1.5% Revenue Deficit Ratio by 2016-17.
Conclusion:
The Budget is not
a Dream-budget. In fact it is an attempt to tide over the current
economic situation while keeping in view socio-political expectations. It is
a humane budget with higher allocations for various welfare programmes.
Though it clarifies certain confusions and plugs loopholes, it is not
aggressive. It is a passable budget.
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ECONOMIC SURVEY 2013:
INDIAN ECONOMY MORE VULNERABLE TO GLOBAL SHOCKS
Emphasizing that
Another external risk is that
"Globalization of Indian economy has helped raise growth, it has also meant greater vulnerability to external shocks. A focus on domestic macroeconomic re-balancing will help reduce vulnerability," said the Economic Survey 2012-13, which was tabled by Finance Minister P Chidambaram in Parliament.
It is unlikely that the support to Indian growth from the global economy would be significant, it added.
"
"The government is committed to fiscal consolidation. This along with demand compression and augmented agricultural production should lead to lower inflation, giving the RBI the requisite flexibility to reduce policy rates," it added.
It also said that global recovery would depend on risks managed from the
Crisis in the Euro zone has become deep, structural and multifaceted, despite several rescue packages over the last two years, posing a major downside risk to the global outlook.
ECONOMIC SURVEY 2013 PEGS GDP GROWTH AT 6.1-6.7% FOR FY14
NEW DELHI
Stating that the medium term fiscal consolidation plan is credible, the Survey has emphasized
the need to step up reforms. "Economic slowdown is a wake up call for
stepping up reforms," the survey has said.
The survey predicts that the global economies also likely to recover in 2013 and various government measures will help in improving the Indian economy's outlook for 2013-14.
"Following the slowdown induced by the global financial crisis in 2008-09, the Indian economy responded strongly to fiscal and monetary stimulus and achieved a growth rate of 8.6 per cent and 9.3 per cent respectively in 2009-10 and 2010-11, but due to a combination of both external and domestic factors, the economy decelerated growing at 6.2% and an estimated 5% in 2011-12 and 2012-13 respectively," the survey said.
The survey has highlighted the domestic causes that have caused the economic slowdown. "The slowdown in the rate of growth of services in 2011-12 at 8.2%, and particularly in 2012-13 to 6.6 percent from the double-digit growth of the previous six years, contributed significantly to slowdown in the overall growth of the economy, while some slowdown could also be attributed to the lower growth in agriculture and industrial activities," the survey said.
However, despite the slowdown, the services sector has shown more resilience to worsening external conditions than agriculture and industry, the survey has noted.
For improved agricultural growth, the survey underlines the need for stable and consistent policies where markets play an appropriate role, private investment in infrastructure is stepped up, food price, food stock management and food distribution improves, and a predictable trade policy is adopted for agriculture.
FDI in retail allowed by the government can pave the way for investment in new technology and marketing of agricultural produce inIndia
The Finance Minister P Chidambaram tabled the annual economic survey in Parliament on Wednesday.
The Survey asssumes importance the light of declining Gross Domestic Product (GDP) growth. The Central Statistical Organisation (CSO) has estimates that growth year for the current fiscal will be at 5 per cent, sharply lower than the original estimate of 7.6 per cent (+/- 0.25 per cent).
The latest GDP data is due to be released on Thursday, shortly before Finance Minister Palaniappan Chidambaram announces the Union Budget 2013-14.
The survey predicts that the global economies also likely to recover in 2013 and various government measures will help in improving the Indian economy's outlook for 2013-14.
"Following the slowdown induced by the global financial crisis in 2008-09, the Indian economy responded strongly to fiscal and monetary stimulus and achieved a growth rate of 8.6 per cent and 9.3 per cent respectively in 2009-10 and 2010-11, but due to a combination of both external and domestic factors, the economy decelerated growing at 6.2% and an estimated 5% in 2011-12 and 2012-13 respectively," the survey said.
The survey has highlighted the domestic causes that have caused the economic slowdown. "The slowdown in the rate of growth of services in 2011-12 at 8.2%, and particularly in 2012-13 to 6.6 percent from the double-digit growth of the previous six years, contributed significantly to slowdown in the overall growth of the economy, while some slowdown could also be attributed to the lower growth in agriculture and industrial activities," the survey said.
However, despite the slowdown, the services sector has shown more resilience to worsening external conditions than agriculture and industry, the survey has noted.
For improved agricultural growth, the survey underlines the need for stable and consistent policies where markets play an appropriate role, private investment in infrastructure is stepped up, food price, food stock management and food distribution improves, and a predictable trade policy is adopted for agriculture.
FDI in retail allowed by the government can pave the way for investment in new technology and marketing of agricultural produce in
The Finance Minister P Chidambaram tabled the annual economic survey in Parliament on Wednesday.
The Survey asssumes importance the light of declining Gross Domestic Product (GDP) growth. The Central Statistical Organisation (CSO) has estimates that growth year for the current fiscal will be at 5 per cent, sharply lower than the original estimate of 7.6 per cent (+/- 0.25 per cent).
The latest GDP data is due to be released on Thursday, shortly before Finance Minister Palaniappan Chidambaram announces the Union Budget 2013-14.
