Mid-yr Economic Review
Industry booms
New Delhi: The Mid-Year Economic Review, presented in Parliament by minister of state for finance S S Palanimanickam, said: "An important and favourable development in recent times is the growing sign of an industrial resurgence - particularly in manufacturing." Overall industrial growth during the first half of current financial year was up at 10.3 pc compared to a growth of 8.4 pc in the same period last year and this helped overcoming the impact of subdued performance of the agricultural sector.

Inflation moderate:
On the price rise front, the government said, "Notwithstanding an increase in prices of certain essential primary commodities, largely because of a demand-supply mismatch and hardening of international prices, overall inflation measured in terms of wholesale price index in first two quarters of the current year averaged 4.81 pc compared to 4.64 pc in FY06 and 6.68 pc in FY05 having successfully weathered the increase in price of crude oil.

Vibrant external sector:
The Mid-year Economic Review also said that the buoyancy in the economy was amply supported by a vibrant external sector that saw engineering goods emerge as the biggest foreign exchange earner, as exports grew by a healthy 34.9 per cent in the first seven months of this fiscal to $69.5 billion.

Engineering goods:
By sustaining a high growth of 38.8 per cent and reaching $10.5 billion in the first five months of this fiscal, engineering goods emerged as the largest contributor to merchandise exports.

High technology sector beats traditional sectors
The high-technology sector has beaten traditional giants like gems and jewellery, petroleum products and textiles, thus reflecting the growing maturity of Indian manufacturing.

The exports of gems and jewellery declined three per cent in April-August.

The overall growth in exports has been attributed to sustained demand from major trading partners, especially fast growing Asian economies. US, UAE, Singapore, China and UK were the top five countries accounting for 42 per cent of the total exports.

On the import front, however, high crude prices played spoil sport.
Imports were up 33 per cent in first seven months of this fiscal at $99.8 billion. In the first six months of 2006-07, crude oil imports were up 38.5 per cent to $29 billion though in volume terms the increase was just 12 per cent.

The ballooning imports saw trade deficit surge to $18.5 billion in the first quarter. The deficit was big enough for the healthy inflows of $12.4 billion through remittances by Indians working abroad and other invisibles to counter.

Though the country was left with a current account deficit of $6.1 billion in April-June 2006, the review said it is unlikely that the current level of deficit would emerge as a cause for alarm.

Greater inflows under External Commercial Borrowings, FDI and banking capital pushed the total net capital inflows $7.7 billion up from April-June last fiscal to $12.5 billion.

The foreign exchange reserves stood at $174.6 billion in November from $151.6 billion in March. The country's external debt stood at $132.1 billion at the end of June, of which short-term debt was just $9.2 billion.
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No more extension for CAS roll-out
New Delhi: The Delhi High Court has refused to grant more time to multi-system operators for implementing Conditional Access System (CAS) and asked them to stick to the December 31 deadline for implementing the new system.

Conditional Access System (CAS) would give cable TV viewers the option of picking and watching channels of their choice through a set-top box and pay only for those channels.

The Bench also gave the Star Broadband Services Pvt Ltd, an MSO, which is one of the petitioners, to apply to the government for reconsidering the case.

Star Services Broadband Pvt Ltd and an NGO, Shakti, have filed applications seeking extra time on the ground that they were working on the infrastructure issue, as laying out the fibre optic cable for implementing CAS was not completed.
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IT tax sops look set to continue after '09
New Delhi: IT biggies like TCS, Infosys and Wipro could get tax sops even after 2009. The government is actively considering extending the Software Technology Parks of India (STPI) scheme beyond March 31, 2009. The scheme, introduced in 1999, offers a complete waiver of income tax on export earnings.

The possibility of extending the waiver has gained momentum following recommendations from PM's economic advisor C Rangarajan. The issue was examined by PM's Economic Advisory Council headed by Mr Rangarajan, who has recommended against withdrawal of the tax exemption.

Sources in the revenue department said though the software industry in the country has seen phenomenal growth, it has yet to attain that global stature and some handholding was still needed for it to implant its footprint in the global map. More so, as some of the Asian countries, including China, are gearing up for an IT revolution and could pose challenges to the industry in the near future.

The IT ministry has also been pushing for extending the scheme. The ministry has also commissioned a study to assess the impact of the SEZ Act and the phasing out of the STPI scheme. The study report was considered by a committee chaired by the member secretary, Planning Commission.

Nasscom also has made a strong pitch for extending the scheme. The association representing who's who in the IT world wants the scheme to be extended by another 10 years.
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