Category: Indian Economy

Budget 2011-12 Highlights

Indiamart | 28/02/2011

  • AC restaurants serving liquor and AC hospitals with more than 25 beds under service tax.
  • Service tax on air travel to be increased.
  • Customs duty on raw silk reduced from 30 to 5 per cent.
  • Legal services to be expanded to business entities.
  • 20% export duty for iron ore.
  • Custom duty on Pet Coke and Gypsum to minimized to 2.5%.
  • No new tax exemption limit for women.
  • Mandatory levy of 10 pct on branded garments.
  • Budget estimates for 2011-12 projects- Rs 9,32,440 crore.
  • No change in Central excise duty rate. Base rate on excise duty raised from 4% to 5%.
  • Surcharge rate reduced from 7.5 percent to 5 percent for domestic companies.
  • Hike in exemption IT limit from Rs 1.6 lakh to Rs 1.8 lakh.
  • New series of coins with new rupee symbol expected.
  • Simplify tax collection procedure.
  • 1 million UID cards to be distributed per day shortly.
  • Targeting to reduce deficit to 4.6% for the upcoming fiscal year.
  • Plan and Non-Plan expenditure to be increased by 23%.
  • BPL pension eligibility age limit reduced.
  • Group formed to monitor corruption;will start implementing from 62 dept. in first phase.
  • Amendment of Indian Stamp Act shortly.
  • Simplified form ‘Sugam’ for small tax payers.
  • Rs 1.64 lakh crore for Defence.
  • Rs 1000 crore to build judicial infrastructure.
  • Group of ministers to sort out Environmental concerns.
  • 1000 crore for improvising judiciary system.
  • Rs 8,000 cr to Northeast.
  • 60 schemes for SC/ST to be implemented.
  • Rs 100 crore for Ladakh.
  • Rs 150 crore for Jammu.
  • Pension amount increased for 80 years and above.
  • Indira Gandhi National Old Age Pension Scheme eligibility revised from 65 to 60 years.
  • Rs 200 cr grant to IIT Kharagpur.
  • Rs 20 crore to IIM Calcutta.
  • 50 Crore to muslim universities in different states.

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Does Inflation Facilitate Foreign Investments in Indian Retail Sector?

If one observes the comments of Indian Prime Minister Dr Manmohan Singh’s, a doubt arises whether the Indian government is going to show rising inflation as an excuse for inviting foreign private investments in Indian retail sector.

The Vice-President of planning commission Mr Montek Singh Ahluvalia has been telling thatManmohan S supply side bottlenecks have been the major cause for the rising inflation in India. Today, speaking at a conference in New Delhi Prime Minister Manmohan Singh expressed concerns over rising inflation adding that inflation is becoming a major obstacle for the growth prospects of India.

An important aspect of Mr Singh was that what he opined for rise in inflation. He said that the farm supply chains needed to be boosted with organised retail chains. This raises doubt that Indian government is going to give permission for foreign entry into retail sector in the name of organized retail chains.

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LIC Housing former CEO cleared realtors’ loans for bribes: CBI

Reuters | Nov 29, 2010 | 7:45pm IST

The former CEO of LIC Housing Finance took bribes to clear loans worth 4.70 billion rupees ($102 million) for three realtors, a lawyer for the Central Bureau of Investigation (CBI) said on Monday. R.R. Nair and senior officials from three state-run banks were arrested by the CBI last week for taking bribes from financial services firm, Money Matters Financial Services, for sanctioning corporate loans.

Nair took bribes for sanctioning a 2-billion-rupee loan to DB Realty, CBI’s lawyer Eijaz Khan said in a Mumbai special court. Nair also accepted bribes for granting a 2-billion-rupee loan to real estate company Mantri and a 700-million-rupee loan to Entertainment World, Khan said, while arguing for extending the custody of the accused.

The bribes-for-loan scandal is one of several to dog the government of Prime Minister Manmohan Singh and test India’s ability to crack down on corruption.

Bribes for Loans Scandal Pulls Down Indian Share Markets

A series of financial scandals is testing the India’s ability to stand as one of the favourite destination in the world for overseas investors. The county, which is second only to the fastest growing Chinese economy, is haunted by number of irregularities and scandals, especially at the top level of the financial and manufacturing companies.

The Central Bureau of Investigation (CBI), the top most investigating agency of the country, unveiled a “bribes for loans” scandal on November 24. The country’s biggest life insurer, Life Insurance Corporation of India and several banks along with private real estate companies and a private brokerage firm are involved in the fraud.

Main allegation of the CBI is that the private real estate and manufacturing companies paid bribes through a private broking firm ‘Money Matters’, to obtain property loans from public sector banks and insurance companies. The top executives of the firms were arrested and kept in remand custody for further probe. The CBI said that it was probing 21 companies for possible links to the bribes for loans scandal.

India share markets BSE (Sensex) and broader index NSE (Nifty) were on losing streak as a result of the financial scandal revelation. The Sensex began to drop on November 22 with Ireland crisis and continued to drop with the unveiling of financial scandal involving 21 companies. It dropped from 19957 on Nov 22 to 19136 on Nov 26, a drop of 4.11%. The National Stock Exchange or Nifty dropped from 6010 on Nov 22 to 5751, a drop of 4.31% in 5 days.

Main companies involved

  • Public sector Company Life Insurance Corporation of India – Investment secretary, Naresh Chopra
  • L I C Housing Finance Ltd., a subsidiary to L I C of India and a mortgage lender with a market cap of about $2 billion – Chief Executive Officer, R R Nair
  • Public Sector Bank, Punjab National Bank with a market cap of $8 billion – Deputy General Manager Venkoba Gujjal
  • Public Sector Bank, Central Bank of India with a market cap of $2 billion – Director Maninder Singh Johar
  • Public Sector Bank, Bank of India with a market cap of $5 billion – General Manager R N Tayal

The companies denied any wrong doing and added they followed procedures. The Finance Minister Mr Pranab Mukherjee said the largest insurer L I C of India will not be effected with the revelation of financial bribery scandal and it was just a case of individuals involved in the scandal. The officials of the other companies also reacted on the same line.

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2G Scam: SC ticks off CBI for not questioning Raja

PTI | Yahoo News | 25/11/2010

The Supreme Court today came down heavily on the CBI for failing to question former Telecom Minster A Raja and Telecom Secretary in the 2G Spectrum scandal, saying it was "beating around the bush". A bench of justices G S Singhvi and A K Ganguly wondered why the premier investigating agency failed to question the duo despite the CVC and CAG report sharply indicting them for their involvement.

"We are on the limited point. The CAG under the constitution has a very important position. It is an authority set up under the constitution. "Any responsible person will question the involvement of the Minister and the Secretary and you (CBI) say that 8,000 documents have been examined. You are beating around the bush. It was (questioning) minimum expected of the CBI. What do you take this court for," the bench observed during the argument.

Explaining the delay, senior counsel K K Venugopal submitted that the CBI has its own methods of investigations.

World Bank mulls investing in $11 billion India fund

Reuters | Sep 28, 2010 | 5:59pm IST

The World Bank is exploring whether to invest in an $11 billion debt fund the Indian government will roll out by next year as part of a massive push to its infrastructure sector, the bank’s India head said. Roberto Zagha said India was making progress in tackling procedural hassles that have held back faster infrastructure growth but a major roadblock to more private investment was a shortage of bankable projects.

india infrastructure The World Bank was likely to lend around $15 billion to $20 billion to India’s infrastructure sector in the next five years. Typically, the bank’s lending to the sector ranges between 40-60 percent of the total annual lending.

The government has announced the $11 billion debt fund as a part of a series of recent measures to overhaul India’s creaking infrastructure, which has long been seen as hobbling faster growth in Asia’s third-largest economy. A similar fund is also under consideration for the power sector.

"It is being explored," Zagha said in an interview as part of the Reuters India Investment Summit, when asked whether the World Bank would contribute to the fund. "Our role is not entirely clear, whether there is a need for finance from the bank, or whether there is a need for expertise from the bank," he added.

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