document.writeln("

Fiscal deficit grows 64 per cent in April-Aug
New Delhi: The Centre's fiscal deficit in the April-August quarter of the current fiscal year has touched Rs86,328 crore, a 64 per cent increase over the fiscal deficit level of Rs52,509 crore in the same period last year.

The fiscal deficit for the five month period represents about 57 per cent of the budget estimate of Rs1,51,144 crore for the entire 2005-06, according to the figures released by the Controller General of Accounts. .

The fall in non-debt capital receipts at Rs3,292 crore during April-August also contributed to the widening of the fiscal deficit. Revenue deficit for the period under review stood at Rs74,372 crore, which is about 78 per cent of the budget estimates of Rs95,312 crore for the entire 2005-06.

On a year-on-year basis, revenue deficit increased by 18.26 per cent to Rs74,392 crore from Rs62,906 crore.

In February this year, the Finance Minister, P. Chidambaram, had projected the fiscal deficit as a proportion of gross domestic product (GDP) at 4.3 per cent for 2005-06.
Back to News Review index page  

CII estimates 7.3 per cent GDP growth
New Delhi: According to the Confederation of Indian Industry report the Indian economy is expected to clock a growth rate of 7.3 per cent for the current fiscal on account of strong prospects of kharif crop production and good industrial and services sector performance.

In its most recent State of Economy Report, the CII has said that the minimum support services announced by the Government for the 2005 kharif season resulted in an increase in area under sowing for major crops. Because of this, agriculture is expected to grow at 3.2 per cent for the current fiscal, higher than the 1.1 per cent growth recorded in 2004-05.

The report also points towards a better than expected performance of Index of Industrial Production, which grew at 9.3 per cent in April-July period of the current fiscal.

According to the report, a strong growth in non-food credit, growth in capital goods, production and imports are perhaps the factors supporting sustained growth for the industrial sector.

The report further says that inflation is expected to be on the higher side at 5-5.5 per cent due to rising crude oil prices.
Back to News Review index page  

More States accept New Pension Scheme
New Delhi: The New Pension Scheme (NPS), is becoming more acceptable to various states on the realisation that their present pension liabilities are not sustainable.

Uttaranchal is the latest state to join the NPS and will apply the scheme to employees who join on or after October 1, this year. Uttaranchal is the thirteenth state to join the scheme. Himachal Pradesh, which notified its scheme in May 2003, has finalised its process only this year.

Jammu and Kashmir has also joined in after facing an annual pension outflow of Rs700 crore against a plan and non-plan wage bill of Rs4,000 crore. The pension outflow amounts to 50 per cent of its tax revenues. Mizoram is also actively considering the scheme and Maharashtra is expected to make the scheme effective for employees joining from November this year.

In the NPS, the pension is linked to the market returns and frees the government from funding the pension liabilities for the new employees.
Back to News Review index page  

World Economic Outlook, September 2005
The IMF's World Economic Outlook (WEO), released to coincide with the latest IMF-World Bank Conference, has concluded that world economic expansion will remain on track despite rising oil prices and a consequent worsening of global economic imbalances.

The IMF has forecast a global economic growth of 4.3 per cent this year, virtually the same as forecast in its April 2005 report. It also notes that the impact of crude price increases on growth and inflation has been "surprisingly moderate".

The IMF report noted that the growth of the global economy demonstrated sufficient momentum to withstand a rise in market-determined interest rates from very low levels, but indicated that rising inflation expectations could lead to a sharp tightening of financial market conditions.

The message of the IMF's latest Outlook is that, "The days of easy money are over." The report also highlights the continuing high dependence of world growth on the US and China and the dangers presented by growing imbalances in the global economy.

Its view is that these imbalances could aggravate protectionist pressures in the US as they have already done in respect of textile imports and outsourcing of services. This trend would be particularly strengthened by the emergence of competitive forces resulting from the success of China's manufacturing industries on the global scene.

The Outlook notes that financial market conditions continue to remain benign. Long-term interest rates, while volatile, remain universally low around the world. Global equity markets remain resilient, supported by strong corporate results and increasingly solid balance-sheets.

The report notes that credit spreads remain moderate. Emerging market financing conditions are very favourable, in part reflecting improved economic fundamentals and the increased presence of long-term investors. The report notes that, in general, in the current low interest rate scenario, market participants have tried to boost yield on their investments through increasingly complex and leveraged strategies. This contains a warning to be heeded by regulators in countries such as India, which is witnessing an unprecedented stock-market boom.

The WEO notes the perceptive comment of the Fed Chairman, Alan Greenspan, that continuance of low interest rates in the long end of the debt markets in the face of rising short-term rates remains a conundrum.

The WEO comments that the situation is difficult to reconcile with economic fundamentals, including rising public debt in countries, in general. It admits the reasons for this contradiction are obviously global in nature, including the rising trends in global savings, particularly in countries, like China.
Back to News Review index page  

Kandla port to scale up with a Rs.5,000 crore investment plan
Ahmedabad: Kandla port, which recently received the Centre's go-ahead for its plans to build six new berths, has begun to identify bidders for the construction of the berths. Four of these berths will be constructed with private participation on a Build-Operate-Transfer (BOT) basis, and are estimated to cost Rs 430 crore.

Two of the berths are expected to be ready by November 2007.

Kandla port has also started work on a capital dredging project in its 27-km navigation channel that will enable it to take in Very Large Crude Carriers.

Kandla will soon invite pre-qualification bids for construction of the two cargo berths that will be funded by the Port. The process of identifying technical advisors for the project is underway.

IDFC has emerged as the lowest bidder to prepare the draft Request for Qualification (RFQ) and licence agreements, and the next board meeting is likely to approve the appointment of the advisor.
Back to News Review index page  

21 VAT-implementing States record higher revenues
New Delhi: 21 VAT-implementing States and Union Territories (UTs) have recorded nearly 16 per cent increase in revenues during the first five months of the current fiscal.

The Finance Ministry has found that the revenues of these States and UTs (for which provisional data is available) increased to about Rs29,878 crore during April-August compared to Rs25,824 crore in the same period last year.

The growth in tax revenues of 23 VAT implementing States/UTs for April-June 2005 was around 15.3 per cent at Rs14,050 crore.

One of the problems faced by a number of States is the absence of efficient data collection systems to accurately quantify the revenues emanating from pure VAT items.

While States like Karnataka, Punjab, and Delhi continue to record strong growth (over 25 per cent) in tax revenues in the VAT regime, Andhra Pradesh has started to show improvement in tax revenues, going by its performance in August 2005. In August, Andhra Pradesh, whose overall growth so far has been modest at around 10 per cent, is understood to have recorded tax revenue growth rate of about 18 per cent.

Meanwhile, Maharashtra is understood to have furnished to the Finance Ministry the details and certificates required in support of its VAT compensation claim of Rs259 crore for the April-June 2005 period.

The Centre had asked Maharashtra and three other States (Kerala, Karnataka, and Assam) to come up with more details in support of their VAT compensation claims for the shortfall in tax revenues on account of VAT implementation.
Back to News Review index page