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Fiscal deficit flares
New Delhi: Plan expenditure has overtaken the gains of a higher tax revenue leading to an overall fiscal deficit to Rs86,328 crore which till August 2005 comprise 57 per cent of the Budget estimate for the whole year ending March 31, 2006. The deficit during the corresponding period last year was only 38.2 per cent of the annual estimate.

According to data released by the Comptroller-General of Accounts, Plan expenditure during April-August touched Rs47,336 crore, which is 33 per cent of the Budget estimate compared with 26 per cent in the corresponding period the previous year.

Non-Plan expenditure was marginally lower at Rs123,453 crore, accounting for 33 per cent of the Budget compared with 35 per cent of the Budget estimate during April-August 2004-05.

Total expenditure at Rs1,70,789 crore accounted for 33.2 per cent of the Budget estimate, which was similar to the 32 per cent of the Budget estimate achieved during April-August 2004-05.

Revenue receipts at Rs81,169 crore accounted for 23.1 per cent of the Budget estimates. While non-tax revenue at Rs22,687 crore accounted for 29 per cent of the Budget estimate, tax revenue at Rs58,482 crore accounted for 21 per cent of the Budget estimate compared with 19.5 per cent in the corresponding period the previous year.
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GDP grows 8.1 pc in Q1; manufacturing up 11.3 per cent
New Delhi: The economy has grown an impressive 8.1 per cent in the first quarter of the current fiscal, against 7.6 per cent in April-June 2004.

The higher growth was on the back of a buoyant manufacturing sector, which grew 7.9 per cent while the services sector grew 11.3 per cent.

The manufacturing sector grew 7.9 per cent in April-June 2004 and 8.9 per cent for the full year 2004-05.

Economists had predicted that the manufacturing sector was showing distinct signs of deceleration in the February and March 2005 quarter.

However, the latest Central Statistical Organisation (CSO) data has overturned these predictions.

Agriculture grew the least at a two per cent rate during the first quarter against 3.8 per cent earlier.

Mining grew only 3.2 per cent, sharply down from 6.9 per cent earlier.

Apart from manufacturing, the sectors that showed significant growth in the first quarter of the current fiscal are electricity, gas and water supply at 7.9 per cent (6.1 per cent), construction at 7.9 percent (five per cent), trade, hotels, transport, and communication at 12.4 per cent (11.5 per cent), and financing, insurance, real estate, and business services at 8.3 per cent (seven per cent).

The GDP (at current prices) in the first quarter of 2005-06 was estimated at Rs7,25,945 crore, reflecting an increase of 12.8 per cent over the GDP level of Rs6,43,645 crore recorded in the same period last year.
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Maharashtra's ban on plastic bags may affect exports
Mumbai: Maharashtra government's ban on plastic bags may impact the entire country.

As per the Basel Convention, to which India is a signatory, if a country prohibits a particular article, either for production or consumption, it cannot trade in that product internationally.

This means, that if any state bans plastic bags, no producer from anywhere in the country can export plastic bags.

Last year India exported plastic bags worth more than Rs500 crore while total exports of plastics and related articles were around Rs9,150 crore in 2004-05.

There is likely to be a spin-off effect as goods packaged in plastic bags such as mango-pulp, fish, spices and other food items too would fall under the purview of this ban.

Some of the major importers of plastic bags from India include the likes of Marks & Spencer, Tesco, Selfridges and Publics. A variety of plastic bags are exported from India - such as block bags, shoppers bags, garbage bags, bin liners, flat bags made from LLDPE, HDPE, grocery bags, milk bags and so on.
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ONGC may have to share Rs 2,830-crore subsidy burden in Q2
Kolkata: ONGC has been asked by the government to share the Rs2,830-crore subsidy burden in the second quarter of the current fiscal.

The company will thus share a subsidy bill of Rs5,706 crore during the first half of 2005-06 against a total subsidy bill of Rs4,104 crore paid for the full year of 2004-05.

ONGC officials said that the high subsidy burden would affect the the company's profitability in the second quarter. ONGC registered a net profit of Rs3,383 crore during the second quarter of the last fiscal.

The company had registered a 43 per cent rise in net profit in the first quarter of this year to Rs2,308 crore even after paying a subsidy bill of Rs2,876 crore.
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FM says reform would continue
New Delhi: Finance minister P Chidambaram stressed that the government would "try harder" to continue to reform the economy, despite constraints of the ruling coalition.

He said he was optimistic of achieving 7-8 per cent GDP growth this fiscal, despite a worrisome low growth in agriculture (2 per cent in Q1).

The minister said growth required higher savings and larger investments - both domestic and foreign. He said that the majority of the investments are going into metals, metal products and chemicals. Sectors like power, steel, mining, ports, shipping and construction can also attract huge investments.

He said further opening up and liberalisation would enable the industry, "throw up surpluses," that would facilitate "massive investments" in agriculture and social sector programmes.
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Central aid to states up 9.8 per cent
New Delhi: The central government has increased the approved outlay of all states and Union territories by 21 per cent in 2005-06 over outlays for the previous fiscal.

Against an agreed outlay of Rs124,112 crore for 2004-05, the amount has gone up to Rs142,935 crore for the current fiscal.

According to a release by the Planning Commission the increase in outlays is due to additional allocation under the national common minimum programme (NCMP), which boosted central assistance to states by 9.8 per cent in 2004-05 to Rs65,512 crore, as against Rs59,663 crore for the previous year.

States' own resources (SOR) for 2004-05 have also shown improvement. Details of SOR show improvement in non-borrowed resources by 27.8 per cent and increase in state's own borrowings by 7.7 per cent over annual Plan 2003-04.
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Trade deficit increases 3-times to $15.8 bn
Mumbai: The country's trade deficit ahs widened three times to $15.80 billion in the first quarter of 2005-06 from $5.17 billion last year due to a surge in capital goods imports and an inflated crude oil bill on account of a rise in prices globally.

The crude oil prices (Indian basket) averaged $49.2 per barrel in April-June 2005 as against $34.1 a barrel in the first quarter of the last fiscal.

Exports rose to $21.75 billion in April-June 2005 against $17.84 billion in April-June 2004. The imports rose to $37.56 billion in April-June 2005 from $23.01 billion in the first quarter of 2004-05.

The non-oil imports comprising items such as capital good and industrial machinery rose by 77.9 per cent while oil import bill grew by 31 per cent in the reporting quarter.

Petroleum products imports were in the range of USD 3.1 to 3.3 billion per month in April-June 2005. The monthly oil import bill Q1 of 2004-05 was lower between $2.1 to $2.7 billion.

The sharp rise in the trade deficit has turned the current account into a deficit of $6.2 billion in April-June 2005 compared to a surplus of $3.4 billion a year earlier, according to Reserve Bank of India's preliminary balance of payments data.

However, the current account deficit was more than offset by surplus in the capital account, resulting in accretion to the foreign exchange reserves of $1.2 billion in Q1 of 2005-06. After factoring in the valuation changes, forex reserves declined by $3.1 billion to $138.4 billion by end of June 2005.

The current account deficit of $6.2 billion in the first quarter of 2005-6 is only marginally lower than the $6.43 billion of the last year as a whole, according to Reserve Bank of India's preliminary balance of payments data released today.
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Status quo declared in Escorts, Fortis deal
New Delhi: The Delhi High Court has maintained a "status quo" on Escorts' sale of 90 per cent equity in Escorts Heart Institute & Research Centre (EHIRC) to Fortis for Rs585 crore.

The order effectively freezes transactions by all concerned parties.

Anil Nanda, the younger brother of Rajan Nanda, Escorts chairman, has challenged the sale on grounds of fraudulent conversion of a charitable society into a limited liability company. Anil Nanda has no equity stake in either EHIRC or Escorts.

Escorts has maintained silence on the HC order, and Fortis has adopted a wait-and-watch stance. It could not be confirmed whether the sale of Escort Ltd's stake to Fortis Healthcare has been completed. The next hearing in the case is on November 22.

EHIRC was originally registered as a charitable society in 1981 and had obtained land from DDA. It had enjoyed benefits available to charitable societies such as income tax exemption for donations, customs duty waiver, etc.
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Left red in face: Only Kolkata airport largely affected
New Delhi: Despite tall claims of a successful strike at airports across the country the Left trade unions have been left red-faced as all airports, barring Kolkata, operated normally on Thursday. Housekeeping was the only division affected by the strike.

Most surprisingly, in the red bastion that is Kerala, all airports functioned normally throughout the day and in Kochi-the only private airport in the country-the entire AAI staff turned up for work.

At Calicut and Trivandrum, there was a shortage of staff but AAI executive officials doubled up ensuring there was no delay. None of Kerala airports recorded a single delay in scheduled flight operations and over 20 flights operated without much inconvenience to the passengers.

The metro airports, which were at the heart of the entire strike call, also reported on-time operations for most their flights.

At the Guwahati office of the Airports Authority of India - the regional headquarters for the entire North-East - reporting complete attendance and most of the staff and executives reported on duty.

At Delhi 69 departures and 74 arrivals were reported while 24 were cancelled in advance and 9 delayed on the domestic side. Five international flights were delayed but 101 departures and arrivals on schedule.

At Mumbai two flights were cancelled due to technical reasons, though all else was normal. In all (domestic and international), there the 103 departures and 96 arrivals by 5:00 pm were all on schedule.

Chennai reported all flight services were normal with 50 departures and 40 arrivals according to schedule during the time the strike was on.

As expected Kolkata was the worst-affected where the fire staff did not hand over the keys after its morning shift. Housekeeping staff did not show up while AAI executives did come forward to help.

The aggressive union did not allow air conditioning to be turned on and to avoid confrontation, AAI officials were forced to close down the AC plant. Most flights to the city were cancelled in advance with one Indian Airlines plane having to return midway. The striking employees also forced the Met staff to move out.
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50 per cent of outsourced jobs from Silicon Valley come to India
New Delhi: According to a survey by Santa Clara University, about 53 percent of the companies in Silicon Valley outsource a part or all of their operations, and most of these jobs come to India and other Asian nations. China remains behind India.

The survey says that while sectors like IT services, healthcare and communications sector see healthy outsourcing, the manufacturing sector is declining.

Another downside is that a higher percentage of firms reported no outsourcing in the last quarter from 51.1 per cent in 2003 to 60.7 percent in 2005. Much of this drop was in the semiconductor and electronics area, according to the survey.

China continued to receive the large part of manufacturing outsourcing.

According to management consultancy Accenture over 23 per cent of US firms and 19 per cent of European firms regard China as their primary sourcing market for manufacturing, while only 14 per cent of US firms prefer India for low-cost sourcing.

India is way ahead of China in terms of IT services outsourcing.
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Forex reserves fall $4.3bn
Mumbai: Foreign exchange reserves of the country declined by $4.3 billion between April and June 2005, against $1 billion during the corresponding period in the previous year, according to a press release from the RBI.

In the corresponding period in the previous year, forex reserves had increased by $6.6 billion.

Currency devaluation reflects the depreciation of major currencies against the US dollar.

In terms of the sources of accretion to forex reserves, foreign investment has registered an increase at $1.9 billion, up from 8 million in the previous year.

NRI deposits have also increased to $2 million, against a fall of 8 million in the previous year.
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